Bank Owned Homes

With the current downturn in the real estate market many homeowners are finding themselves upside down in their mortgage, their home in negative equity and facing foreclosure.

Hundreds of thousands of homes have been foreclosed and are now bank owned or REO (real estate owned, a term for bank owned assets).

The banks don't want to own residential real estate, they want to offload it fast for a decent price.

Typically a lender will have a very good idea of the market price for a home before they foreclose on it. They will have performed at least two BPO's (Broker Price Opinion) to confirm a true market valuation for the subject property.

Also after foreclosure if they are listing it with a broker for sale they will have another valuation performed to ensure a competitive listing price to sell the property in a short period of time to a well qualified buyer.

Every real estate market in the country will have brokers who are specializing in Bank Owned Homes for Sale. Typically these brokers work with the banks performing BPO's and property inspections without ever getting a listing. This is to build up a relationship of trust with the banks and their asset management departments in the hope of getting bank owned home listings in the future.

For the perspective buyer of bank owned homes it is a good idea to team up with a broker who understands the market in the area and has some knowledge of distressed real estate.

Bank owned homes have gone through the foreclosure process. They will be badly maintained. A homeowner in foreclosure is unlikely to have kept up with required maintenance. Also the home will be vacant for a period of time and subject to local weather conditions which in th north can be very severe in the winter time.

Although most banks will have a management company change locks and winterize homes it only takes one freeze before winterization to flood a property causing huge water and mold damage.

Also because the home is vacant it is susceptible to petty thieves who especially like to steal all the copper plumbing pipes.

Because of these conditions it really is possible to find a jewel in the rough. If the neighborhood is good and the structure is good a distressed property can be brought back to life by a savvy buyer and build up a big equity position in a hurry.

Before you decide to make an offer have a contractor give you a realistic quotation for necessary work to bring the property back to habitable condition

Check with the city to ensure that all permits are in place and most importantly for any existing violations. The last thing you want to do is become the owner of code violations.

Is the property permitted for the use you intend to use It for. Just because it looks like a three family home and is being marketed as a three family home does not mean that the city consider it a three family home. Sometimes the reason for a foreclosure is because the city has taken action against a property owner for illegal use. Do not buy someones problems because you don't feel like doing due diligence.

So the property checks out and you have a realistic rehab figure and you want to proceed with the offer.

Remember the bank is selling as is, however a conventional lender might not be willing to lend money as is.

If the property needs extensive renovations the offer might need to be accompanied with a pre approval for construction financing or a letter of assets from your bank showing sufficient funds to close.

If you are making an offer subject to financing the bank will stick close to its asking price.

If you are a cash buyer the bank will listen to your offer even if you low ball.

The best offer is a cash offer with no contingencies. The bank will not be interested in home inspections these should be attended to before you decide to make an offer. The only contingency should be clear title.

Below is a list of some useful websites containing listing of Bank Owned Homes

Government Auctions   This is a membership site with great information on Government Auction Deals

Bank of America

Bayview Financial

Compass Bank

Chase

Citi Bank

CountryWide

Fannie Mae

FDIC

Freddie Mac

HSBC

HUD

Hud Multi Family

Indymac

IRS

M&T Bank

PNC

Wells Fargo

VA

Bank Foreclosed Home Listings

Wilshire Financial