3 min read
Bank-owned homes, commonly referred to as REO (real estate-owned) properties, have been foreclosed on and repossessed by the bank. REO properties are highly sought after because a bank will almost always offload the property at a below-market price. Why? Banks often own hundreds of foreclosures and are not making money off them, so they have a huge incentive to sell.
Here are a few ways to find bank-owned homes:
Check the Multiple Listing Service
The best way to find bank-owned homes is via the Multiple Listing Service (MLS). The MLS acts as a central database for many agencies' real estate listings. Remember that real estate brokers created the Multiple Listing Service, and access requires a real estate license. Therefore, actual access to the MLS will require you to work with a realtor.
However, if hiring a realtor is not for you, there are a couple of ways to use the MLS service without ever accessing it directly:
Individual Realtor Websites
Some realtors pay for MLS listings to appear on their websites, and anyone visiting their sites can access them.
Real Estate Websites
Many popular real estate websites have MLS-listed properties displayed alongside all other listings.
Visit Bank Websites
Many banks have an online feature available to search for REO properties on their websites.
Buying a Bank-Owned Home
Once you locate a bank-owned home that interests you, buying the property works much like any other home sale. You will still need to get approved for a mortgage, inspect the house, and make an offer. There are, however, a few differences when buying an REO property compared to a typical home sale.
It is generally advisable to work with a real estate agent who has REO property experience for the following reasons:
Bank-owned homes tend to have a more extended negotiation period than a traditional home sale. It is because multiple people must approve the transaction. You only need the homeowner(s) authorization in a standard deal.
Every actual state transaction recommends an independent home transaction. However, a thorough inspection is essential when buying a bank-owned home. It is because the bank may have only some of the inspection and repair records, as they would have been in the custody of the home's resident before foreclosure.
Furthermore, a title search is highly recommended to discover and clear any liens against the home that did not disclose to the bank during the foreclosure process. It is the bank's responsibility, but the buyer can perform a title search to ensure this portion of the transaction goes smoothly.
Bank-owned homes are excellent properties to acquire under certain conditions. It is possible to complete this process without using a realtor, and many people do. However, realtor fees are a small price to pay in exchange for having a knowledgeable partner in the process and ensuring you get the best deal possible. The choice is ultimately up to you!