The difference between a ‘Foreclosure’ and a ‘Bank-Owned Home’ may be technical, but important to understand. Foreclosures are properties that are auctioned off in a court process. A bank-owned home, on the other hand, is one that has reverted to the mortgage issuer: a bank.
A foreclosure can change hands with the bang of the auctioneer’s gavel: it’s a cash-in-hand situation, carrying all of the excitement (and risk) of any auction.
With a bank-owned home, the ‘owned’ is attached by hyphen to a banking institution – a spot not exactly known for excitement. True, banks are eager to sell, since a bank-owned home represents an unprofitable financial and management burden. But banks are by definition cautious, thorough, and usually (unlike auctioneers) prone to moving like molasses in December. So, persistence and care will be needed to take advantage of the potential bargain a local bank-owned home represents.
Since you will need to prove you are qualified to buy a bank-owned home, being pre-approved for a loan will come in handy. It will also be important to have a good home inspector at the ready, since most bank-owned properties are sold as-is. You will want detailed information about the condition of the house and likely cost of repairs that need to be made.
And while there are many sources for identifying a suitable bank-owned home online, when it comes to the next step — putting together a successful offer — enlisting an experienced local real estate agent is standard practice. Sometimes a bank-owned home can be priced under market, sometimes over — but if you want to write the winning offer, you need to examine and understand the latest numbers. By looking up the market comps and procuring costs faced by banks, your agent will help you present an offer that is both attractive to the bank and to you.
This winter, whether you are looking for an entry-level condo, a bargain fixer-upper, or a luxury REO, as soon as you are ready to start the search, call me — I will get you a list of local bank-owned homes now accepting offers.