Buying bank owned homes and properties

I get many emails and calls asking if I ever hear about the repos and auction homes when they come out on the market.  The answer is yes there are new homes every week.  Another frequent inquiry is if I can locate cheap properties before they come out on the market.  The answer is yes!

Buying a bank owned or REO (real estate owned) property can involve some considerable time and effort on both the buyer and seller.  Are these properties a good value? Are they for the first time home buyer?  I will try to answer these questions and detail some of the process to acquire repossessions and pre-repossessions.

Some things to know before we go on.  HUD or (Housing and Urban Development) is a type of loan that is backed by the US Government.  They have financed many homes over the past years.  They are the owner of the loans and have final say so on the sale.  When a HUD home goes into foreclosure, they go to a contracted Real Estate agency, this agency then lists them as “auction homes”.  The auction homes are not exactly the same as showing up at the property to bid and give them your cash.  The bid process is done on paper and could take some time to learn if you have bought the property.

The buyer of HUD auction homes still need to be qualified and have the assets to purchase the home.  This is all determined prior to any contracts being submitted.  Your favorite Realtor will present you with all of the paperwork.  A point to consider is that HUD is still trying to get the best bang for the buck, but the difference is that a owner occupied buyer may have a better chance than an investor to start off.

Other Banks and Mortgage owners may have different criteria and will sell to the highest contract price.  Knowing the market value and the remaining amount of the note of the property together with the banks requirements all determine what you will offer for your loan.

Is buying Bank owned repossessions a good deal?  The answer is that it all depends!  Many of the properties are being sold as is, which means that what you see is what you bought.  It will require great diligence to determine if the property is in move in condition or if it is going to require lender fixes in order to get a mortgage.  Remember if you are getting a loan to buy a property it still has to satisfy the lender requirements.

I often get calls from potential buyers wanting to low ball or place a low contract on these types of properties.  I point out the fact that we are looking at properties that every realtor has clients searching for the same deals.  Then there is the formula that everyone talks about.  It really boils down to get all of your information gathering correct before you make an offer. 

The best time to purchase a distressed loan, is prior to it going to foreclosure.  These are called “Short Sales”, homes that are listed and sold with the lenders approval before they go into the foreclosure process.  Email or call me if you would like to know more information on Bank owned and HUD repossessions.