Buying bank owned properties
There is a lot of interest in buying bank owned properties these days and a lot of them available. Often the information offered is for sale, with the promise that you can make a lot of money with little effort once you know “the secret formula”. The fact is that there are no secrets, and to make money does require effort. You can also get all of the information you need from me- free of charge.

What’s a REO? Sometimes called "bank owned" or "repos", these are properties that have been foreclosed and are now owned by the bank or mortgage company. The property did not find a buyer during foreclosure auction. The bank now owns it. The bank should see to the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing. Do be aware that in Indiana the seller of an REO is exempt  from giving a Residential Sales Disclosure, which is a document that normally requires sellers to tell you about any defects they are aware of.

Is it a bargain?
It’s commonly assumed that any REO must be a bargain and an opportunity for easy money. This simply isn’t true. You have to be very careful about buying a REO if your intent is to make money off of it.  While it’s true that the bank is typically anxious to sell it quickly, they are also strongly motivated to get as much as they can for it.  When considering the value of a REO, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale. The bargains with money making potential exist, and many people do very well buying foreclosures. But there are also many REO’s that are not good buys and not likely to turn a profit. 

Ready to make an offer?
Most banks have a REO department that you’ll work with when buying a REO property from them. Typically the REO department will use a listing agent to get their REO properties listed on the local MLS. Before making your offer, you’ll want to visit your lender, most sellers of repos will require preapproval. If you plan on living in the home, you may be eligible for an FHA loan that will also include the cost of necessary repairs.  Since banks almost always sell REO properties “as is”, you’ll want to be sure and include an inspection contingency in your offer that gives you time to check for hidden damage and terminate the offer if you find it.  After you’ve made your offer, you can expect the bank to make a counter offer. Then it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer. Realize, you’ll be dealing with a process that probably involves multiple people at the bank, and they don’t work evenings or weekends.  It’s not unusual for the process of offers and counter offers to take days or even weeks. Once a deal is struck, it can take much longer to close the deal on a repo, and most banks retain an option of backing out at any time.

My firm is a broker of HUD homes and a listing broker for Fannie Mae homes. I have experience in the process and have helped buyers with the purchase of repo homes. You can search Indiana HUD Homes . You can Search Fannie Mae homes. If you find a home you are interested in seeing, give me a call. As your buyer's agent, I can show you any property listed by any agent or company in the area.

To receive listings of REO properties by email as soon as they are put on the market, FindOutFirst