3.2 min read
Bank-owned homes are foreclosure properties that banks have in their possession. Although they take different avenues to return to the bank, the result is the same. The banks own properties that they need to sell. As far as the question, “Can you negotiate on a bank-owned property?” the short answer is yes. Here are some factors that can get you a better price on a bank-owned property:
Time on Market
Every bank fully expects REO properties to spend some time on the market before they make the sale. However, they have limits on how long they will let a listing stay on their books before reevaluating their pricing. It is critical knowledge for someone looking to get a better price on a bank-owned property. By monitoring bank-owned real estate over time, you can make an offer immediately after a price drop. Essentially, you are getting a better deal without negotiating at all!
Furthermore, suppose a listing has been on the market for a long duration with no price change. It may signify that the bank will be more willing to negotiate a lower sale price.
As you can imagine, many people facing foreclosure are emotionally distraught.
It can result in their ceasing any effort to maintain their home or even becoming destructive and damaging parts of the house. There are a couple of ways a financial institution will handle a home that has not been taken care of by the former owner.
For Sale “As is”:
Some banks list the property for sale “as is.” They want no part of the repairs and acknowledge the damage, leaving the restoration efforts up to the buyer.
Repairs Performed by Bank:
Other banks opt to pay for repairs and restoration themselves. They will independently assess the damage and send contractors in to fix any major issues.
When a bank lists a home for sale “as is,” it means that they are listing the property at a price with consideration for the current damage. Typically, that means they will not be willing to negotiate the price on that basis.
However, suppose you are the only prospective buyer of a property on the market for an extended duration. You can still make a case for the cost factors required to make the home livable. An independent home inspection can assess all damages needed to be repaired and potentially discover new issues. It may stand a chance of getting the price dropped further.
You Are Just a Number
It is essential to understand that you are nothing more than a number from the bank’s perspective. Banks own hundreds of homes and are not interested in you personally; they only care about the bottom line. How much money are they going to make on the sale?
Keeping focused on the terms and avoiding being overly conversational or telling them about your personal life will speed things along. Banks appreciate buyers who swiftly deal with their end of the contract.
Patience is vital when it comes to negotiating with a bank. Their bankers have many different contracts that they are handling, so don’t expect to be their top priority. They are taking care of business and will get to you when they can. Becoming frustrated and impatient can affect your decision-making and cause the bank to consider other offers because they don’t have time to deal with difficult buyers.