When thinking about buying residential real estate as an investment or a new place to live, most people want to get a good deal. One way to do this is to buy a bank-owned, also known as real-estate owned (REO), property. These properties are often sold as-is by banks as a last ditch effort to recoup the losses from a foreclosure. When a home is foreclosed, it goes to auction and if it fails to sell at auction, the home becomes the bank’s property.
When a property is bank owned, the bank is responsible for maintaining the home and paying the property taxes, which isn’t ideal. Therefore, lenders are often extremely motivated to sell these homes as soon as possible. Often, they can be purchased at fantastic prices with a quicker closing process and flexible financing, depending on which kind the home qualifies for.
If buying on a bank-owned property sounds interesting, here are a couple of things to keep in mind.
- The bank may consider offers below asking. Given that the bank’s main concern is recouping the money it lent on the house, in general, you should be prepared to pay the asking price, which is most likely the market value. There is usually no room for negotiations, but in certain situations, for instance, if the home has been on the market for a while, a lower-than-asking price would be entertained and even accepted. When these homes are auctioned, a minimum bid will probably need to be met before an offer is accepted for the property.
- Properties are sold as-is. It’s worth repeating that when you buy a bank-owned home, most of the time, any problems that arise are the buyer’s to solve. It’s a good idea to do your research to make sure you know what you’re getting into before you bid on a home. Sellers most likely won’t give a repair discount, either.
- Do your due diligence. Getting an inspection is always a smart move, even more so when it comes to buying bank-owned properties. Residences are often vacant, so you can inspect before you buy and check for structural, electrical or plumbing issues. Since you are buying the property as-is, it’s important to know what you’re bidding on.
- Find out how much it’s worth. Get an appraisal to determine the market value of the home and make sure you pay a fair price.
Bank-owned properties are excellent for a quick investment without much hassle. On Hubzu, you can filter the auction listings to find available bank-owned properties in a particular state. On the individual listing pages, you’ll find the occupancy status, whether or not the ‘reserve’ (or the seller’s minimum price) has been met and additional property information.
Follow these steps to start bidding on bank-owned properties:
- Get a Hubzu account. It’s free and easy.
- Start your search. You can use the filter “Bank-Owned” to find available houses.
- Favorite any properties that you like, and you’ll receive relevant updates.
- Make a note of auction start and end times to remind yourself to bid.
- Check out the details, and request a tour prior to auction (if available).
- When the auction begins, place a bid deposit to show you are serious.
- Bid on a property right from your couch with our mobile app.
- Once your bid is approved by the lender, sign the purchase agreement.
- Begin the standard closing process once the contract is complete, and the property is in escrow.
- Congrats on your newest property!
Get in on the Hubzu auctions today!