All is not lost if you’ve missed the pre-foreclosure and the auction period. You can still get a property at a discount through a Bank Owned or REO Foreclosure. When a property receives no bids at all or if nobody is willing to pay even the opening bid, the foreclosing lender bids for it and takes the property back. The Bank then passes on the property to its REO (Real Estate Owned) department which makes arrangements to sell the property.
Getting a property once it becomes bank owned is pretty simple and clear-cut. It is similar to shopping for a property that has never reached foreclosure proceedings. Let’s look at the advantages and disadvantages of purchasing a Bank Owned/REO property.
· You can take time to make a decision since there’s no mandatory time limit fixed like it is in an auction.
· You get the opportunity to take a good look at the property to get an idea of the condition that it is in and the repairs and maintenance that has to be done.
· There is no inconvenience or awkwardness because the bank makes the arrangements to evict the former owners.
· You don’t have to bother about any other liens on the property because they are taken care of by the bank itself.
· An REO property will be more expensive than one acquired during pre-foreclosure. Though the property is unsold, it is still unlikely that the bank will get rid of it at rock bottom prices. Sometimes the price fixed by the bank is more than the market value of the property.
· Most of the time the bank wants to dispose off the property in an as-is condition. To prevent yourself from getting any nasty surprises put in an ‘inspection contingency’ condition. This will let you inspect the property and pull back your offer if the property is not up to the mark.
· Banks are not required by mandate to supply a Property Condition Disclosure Statement. However, if a real estate agent is involved, he is compelled to provide a Property Condition Disclosure Statement.
To purchase a Bank Owned/REO property you have to make an offer to the bank. Even though the auction was unsuccessful the bank will still try to get the best price they can. Once you make your offer, the bank will make a counter offer generally one that is higher than your offer. Settle on your maximum price and make a final offer. Thereafter it will be put forth for approval after which a decision will be taken.
Many people still question the wisdom of purchasing an REO or bank owned property. The price is not as low as it is during pre-foreclosure. Moreover, the repairs and other renovations required may send your budget flying through the roof. However, this doesn’t mean that you can’t get a discount on REO properties. Keep your eyes and ears open and negotiate the best bargain you can keeping your financial circumstances and the worth of the property in mind.
Article Source: http://EzineArticles.com/5327131