Bank Owned Homes
Find the Right Real Estate Agent
Goodspeed Group Inc has a history of working with bank-owned properties, and HUD properties. Many real estate agents form long-term relationships with banks and can therefore help buyers find bank-owned properties before they are even listed on the market. Real estate agents who know the local foreclosure market can also tell buyers if bank-owned homes are being offered at a fair price based on similar homes in the area.
How to buy a Bank Owned Home…
When a borrower or home owner misses a mortgage payments to his lender, the loan falls into default. Once this occurs, the lender can initiate a foreclosure process to reclaim the property. The lender will then attempt to sell the property to recover the unpaid balance of the mortgage loan. A foreclosed, or “bank owned,” home is typically offered for sale at auction first and, if the auction is unsuccessful, marketed in the traditional manner through a real estate company. Foreclosure auctions are open to the public and conducted at the courthouse of the county the property is located in
Pre-Approval Is Key
- Getting a pre-approved for a mortgage loan before you begin searching for bank-owned or any other types of properties is part of the process. Bank-owned homes may and can sell for prices that are below market rate, they often attract many buyers. You want to be as attractive a buyer to banks as possible. and one way to do this is to get pre-approved by a mortgage lender or mortgage broker. When you are pre-approved, a lender has already studied your finances and credit score and has promised to give you a certain amount of mortgage money. Banks know that pre-approved buyers will have the mortgage dollars they need to actually close a sale. To get pre-approved, you’ll have to provide lenders with many types of copies of your financial documents such as your last two tax returns, two most recent paycheck stubs and last two months’ worth of savings and checking account statements. Lenders will also run your credit score to make sure you have a history of paying your bills on time.
- Even if a bank-owned home is a steal, buyers should know their financial limits and stay within their means. Talk to a mortgage representative and provide the necessary paperwork to learn about down payment requirements and monthly payment predictions. Your real estate agent, friends or family members should be able to refer you to a reputable company. Many banks require a pre-approval letter before considering a buyer’s offer to purchase a home
Order a Home Inspection
- Order a home inspection before signing on the dotted line. An inspector will inspect the major components of a home to uncover possible trouble points, which can everything from an aging roof to a cracking foundation. Bank-owned homes often arrive on the market in especially bad condition. This is because many owners who were foreclosed on could not afford to spend the money necessary to properly maintain the home and grounds. There are even cases where owners deliberately damage homes out of anger at being foreclosed on. A home inspector can help you determine how much money you’ll need to sink into a bank-owned home after purchasing it. This can impact how much you’ll be willing to pay for the home.
- Bank-owned homes come as is, meaning that no one will make any repairs to these properties before you take ownership. You will be responsible for making any necessary repairs to bank-owned homes. Make sure the cost of these repairs isn’t so high that it offsets the lower purchase price of the home.
Tips & Warnings
- Get referred to a lender/broker from Goodspeed Group Inc. or family members. No 1-800 numbers
- Ask around for a good realtor and lender with experience in bank owned properties
- This information is deemed reliable, but not guaranteed. Buyers purchasing bank owned homes are purchasing at their own risk, and will most likely be taking the property in as is condition.
Know Your Market
- Become familiar with housing prices in the neighborhoods where you may consider purchasing a home. Drive the area that you are considering, it is important that you feel comfortable with the neighborhood. Goodspeed Group Inc can also provide data on recent and pending sales in the area. Information is available to the public on county websites about recent sales. Knowing the market allows you to know when a bank-owned home is true bargain. There are plenty of websites that allow you to search for properties, such as Zillow, Realtor.com, Trulia, Redfin, and many more.
Conduct a Pre-Inspection
- Most banks list REO homes for sale as-is and at a lower price to compensate for potential repair costs. This does not prevent a buyer from asking for a credit for repairs or assistance fixing any work that may be a health or safety hazard. Consider having a professional inspection on the home prior to writing an offer. This eliminates surprises once you are under contract with the bank and allows you to budget for necessary maintenance work once the sale closes. Inspections are typically performed once the home is under contract, but many banks will allow a pre-inspection.
Get Pre-Approved for a Mortgage
- Even if a bank-owned home is a steal, buyers should know their financial limits and stay within their means. Talk to a mortgage representative and provide the necessary paperwork to learn about down payment requirements and monthly payment predictions. Your real estate agent, friends or family members should be able to refer you to a reputable company. Many banks require a pre-approval letter before considering a buyer’s offer to purchase a home.
Look Past the Damage
- Since bank-owned homes are recent foreclosures, many have extensive damage from frustrated homeowners who fell behind on their payments. From missing appliances to dry wall holes to overwhelming pet odors, be prepared to see homes in every condition imaginable. The key as a buyer is to look past the damage and determine whether the potential for the home and surrounding neighborhood outweigh the necessary repairs.
Understand the Contract
- Your real estate agent can assist you with writing an offer and submitting it to the bank for consideration. Most lenders will respond to the initial offer with their own version of a purchase and sale agreement that may differ greatly from the forms submitted by your agent. Consider having an attorney review the paperwork and advise you on how to proceed.