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Bank Owned Do’s & Don’ts - Information on Foreclosures
By admin | April 4, 2008
For thousands of people shut out of the Northern Virginia housing market as prices doubled between 2001 and 2006, bank-owned homes are real estate’s new gold rush.
But buying houses from a faceless bank is different than buying from the neighborhood couple moving to Charlotte. “Buyer beware” is the watchword with a bank-owned home sale.
Unlike a traditional transaction, there are no disclosures of potential problems, no seller-paid inspections, and houses are sold “as is.” Furthermore, banks won’t accept offers contingent on selling another house, and “lowballing” generally doesn’t work.
And with investors crowding the field, competition for the best deals can be heartbreaking.
Real estate agents who specialize in bank-owned homes say a wave of bank repos will be flooding the market this spring and summer. So if you’re thinking now is the time to buy a bank-owned house _ known in the industry as “real estate owned” or REO _ here are some considerations:
- Bank-owned homes typically sell within 5 percent to 10 percent of their listing price.
- The No. 1 thing a first-time buyer needs is to be approved by a reliable lender. Most of these banks won’t even look at your offer without a letter from a lender, and sometimes two.
- Pay for your own inspection report and factor in the cost of repairs. Unlike individual sellers who must disclose what they know about their home’s condition, banks are exempt because they’ve never lived in the home.
- In many cases, carpets are stained, swimming pools have not been maintained, and interior walls are damaged or only partially painted. Electrical fixtures and appliances are often missing.
- Above all, be patient. Banks may accumulate multiple offers before responding and will never answer an offer over the weekend.
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