postheadericon How to Buy a Bank Owned Home

Foreclosure auctions are the most common type of foreclosure sale, but not all foreclosures sell at auction. Some fail to meet the minimum desired bid. In some cases, particularly in the case of government foreclosures, the lender makes the highest bid. Once the lender has gained ownership of the property, it is considered to be Real Estate Owned (REO).

Some buyers and investors prefer buying foreclosed homes from the lender rather than through a short sale or auction. Investors particularly like being able to negotiate directly with the bank or lender as opposed to the homeowner or a trustee. This guide will show you the benefits, steps and tips for buying foreclosed houses owned by a bank or lender:

How to Buy a Bank Owned Home

1 Hire a realtor: Some lenders are overly cautious about selling foreclosure homes to unrepresented buyers. Even experienced buyers may want to consider hiring a real estate agent.

How to Buy a Bank Owned Home

2 Research the market: Find out for how much similar foreclosures in the area are selling. You should research the regular housing market as well, especially if you intend to resell the house.

How to Buy a Bank Owned Home

3 Apply for a loan: Getting pre-approved for a loan greatly increases your chances of successful bids on foreclosures for sale. The lender will likely want to see proof that you can afford the home.

How to Buy a Bank Owned Home

4 Inspect the property: You’ll want to factor in liens and the cost of repairs into your offer on the house. If you have time and permission, run a title search and hire professional inspectors.

How to Buy a Bank Owned Home

5 Witness other bank sales: You may want to witness other sales by the same lender to form an idea of how they do business. They may be expecting things like a minimum upfront payment.

How to Buy a Bank Owned Home

6 Make your bid: Base your offer on everything you’ve learned thus far. Take the cost of similar real estate foreclosures into consideration. Subtract this by the estimated cost of repairs and liens.

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