Everything I open today seems to be a mouthpiece for complaints about the entire process involved in buying a bank owned home. Granted, the process has its quirks, and the proliferation of really bad information from people calling themselves experts is hurting the cause. Yet, there are some reasons why you should consider buying a bank owned foreclosure when you are shopping for a home or property.
If you are the type of person that really prefers buying a car and not dickering or playing games with a sales manager, buying a bank owned (REO) property is pretty similar. Despite all the information that provides secret negotiating tips for these homes, let me give you a big tip. Make a really good offer up front and at best make one counter offer. It is a straight forward process making an offer. If you start super low you will get the response your offer deserves. If you make your offer really complicated, it too will be received with a thud. Banks have this selling process figured out. You are not going to out-think them. The KISS principle has never been more relevant.
Piece of Mind
If you are an investor and are thinking buying pre-foreclosure or short sales is the way to go, I know you take a lot of steps to make sure there are no hidden liens, right? A property that has cleared foreclosure and is marketed by a bank with title insurance is going to allow you to sleep at night and avoid those unexpected expensive surprises.
More Piece of Mind
Is that possible? Yes, because unlike dealing with a home bought at the actual sheriff sale, you can place an inspection contingency in your offer and make sure whatever defects are discovered are ones that you are willing to accept. Even experienced investors are well served utilizing a skilled inspector. Also, a little known point about bank properties is that a home needing a lot of repairs has been valued based on not just the broker’s opinion of value. There has also been an appraiser on site and between both parties there is a pretty good value given to the bank that considers many of these issues.
Paying Too Much
Every time a buyer questions our list price for a bank owned property I run this statistic by them. In the last 12 months (and for the last several years) the WILMOTH Group’s average sale price to list price ratio has been 98%. That means almost all of our listings sell very close to the list price. I am not bragging, this is just an indication that the appraiser and broker are getting it right, and the bank is not gouging on the list price.
Compared to buying any other type of real estate, the process for acquiring a bank owned property is very straight forward. True, in today’s market there are preference periods for owner occupants. The primary issue is financing and a lot of these properties clear the preference period and become available to investors or second home buyers.
Don’t let somebody else give you a bad story on buying bank owned REO until you try it yourself!