How to Find and Purchase Bank Owned Properties

Bank owned properties, also known as Real Estate Owned (REO) properties, offer unique opportunities for homebuyers and investors to purchase homes at potentially lower prices. These properties have been foreclosed upon and are now owned by the bank, often being sold at a discount to recover the outstanding mortgage balance. This guide will walk you through the process of finding and purchasing bank owned properties, helping you secure a great deal on your next home.

What are Bank Owned Properties?

Bank owned properties are homes that have gone through the foreclosure process and failed to sell at auction. As a result, the lender, usually a bank, takes ownership of the property. These properties are then listed for sale, often at a discounted price, making them attractive to buyers looking for a bargain.

Advantages of Buying Bank Owned Properties

1. Lower Prices: Banks are motivated to sell these properties quickly, often resulting in lower prices compared to traditional market listings.
2. Clear Title: Banks typically clear any liens or back taxes on the property, ensuring a clean title for the new owner.
3. Potential for Investment: These properties can be excellent investment opportunities for those looking to renovate and resell or rent.

Disadvantages to Consider

1. Property Condition: Many bank owned properties are sold “as-is,” meaning they may require significant repairs.
2. Competitive Market: Due to their lower prices, bank owned properties can attract a lot of interest, leading to competitive bidding situations.

Where to Find Bank Owned Properties

Finding bank owned properties requires knowing where to look. Here are some effective sources:

1. Real Estate Websites: Popular websites like Zillow, Realtor.com, and Foreclosure.com list bank owned properties. They often provide filters to narrow down your search.
2. Bank Websites: Many banks list their REO properties directly on their websites. Examples include Wells Fargo, Bank of America, and Chase.
3. Auction Sites: Websites like Auction.com and Hubzu specialize in auctioning bank owned properties.
4. MLS: The Multiple Listing Service (MLS) used by real estate agents also includes bank owned properties.
5. Public Records: County websites may list foreclosed properties and upcoming auctions.
6. Local Realtors: Realtors specializing in foreclosures can provide valuable insights and access to listings not available to the general public.

Steps to Purchase a Bank Owned Property

1. Get Pre-Approved for a Mortgage

Before you start your search, get pre-approved for a mortgage. This shows sellers that you are a serious buyer and speeds up the purchasing process.

2. Work with a Real Estate Agent

Consider working with a real estate agent who has experience with bank owned properties. They can guide you through the process, help you find listings, and assist with negotiations.

3. Search for Properties

Use the resources mentioned above to find bank owned properties. Narrow down your search based on location, price range, and property condition.

4. Conduct Thorough Research

Once you find a potential property, conduct thorough research. This includes:

• Property History: Check the history of the property, including previous ownership and any liens.
• Property Condition: Visit the property and assess its condition. If possible, get a professional inspection to identify any major issues.

5. Make an Offer

Submit an offer to the bank. Be prepared for a counteroffer or a bidding war, especially if the property is priced attractively. Ensure your offer is competitive but also leaves room for necessary repairs.

6. Secure Financing

Once your offer is accepted, work with your lender to secure financing. Since bank owned properties are often sold “as-is,” ensure your lender is aware of any potential repair costs.

7. Close the Deal

After securing financing, proceed to close the deal. This involves signing the necessary paperwork and transferring ownership. Ensure all liens are cleared and you receive a clean title.

Tips for Minimizing Risks

1. Inspect the Property: Always inspect the property thoroughly. Bank owned properties are sold “as-is,” so understanding the condition is crucial.
2. Budget for Repairs: Set aside a budget for repairs and renovations. Factor this into your overall purchase decision.
3. Title Search: Conduct a title search to ensure there are no outstanding liens or encumbrances on the property.
4. Professional Help: Work with professionals, including real estate agents, inspectors, and attorneys, to navigate the process smoothly.

Conclusion

Buying bank owned properties can be a lucrative way to secure a home or investment property at a lower cost. By understanding where to find these properties, how to navigate the purchasing process, and how to minimize risks, you can take advantage of the opportunities these properties offer. Whether you are a first-time homebuyer or an experienced investor, bank owned properties can provide excellent value with the right approach.If you’re ready to start your journey into purchasing bank owned properties, contact Bay Area Escrow for expert assistance, when it’s escrow time.