If you’re planning to buy a home, you may have your eye on a bank-owned property. As such, you can often get a great deal on a bank-owned home. But, you might have to jump through hoops when buying such a property.
All the same, if you want to take the plunge, click here for bank owned homes in Orlando. Before we get into the details of acquiring a bank-owned home, let’s discuss what it truly means.
Real-estate Owned Property
A bank-owned property- sometimes called a real-estate owned (REO) property- is a property that a lender repossesses after the owner fails to make mortgage payments. When this happens, the bank will try to sell the property to recoup its losses.
You can find bank-owned properties across the U.S. However, an REO property is usually sold as-is, meaning you will be responsible for making any necessary repairs or improvements as a buyer.
With this in mind, you should consider whether you’re willing and able to take on such a project before making an offer on a bank-owned property. Meanwhile, here are the steps you can follow to acquire an REO home.
1. Search for Available REO Properties
The first step in buying an REO property is finding one for sale. While some banks may list their properties on their website, others will use a real estate agent to sell the home. You can search for available REO properties in your area by:
- Contacting a local real estate agent
- Searching for REO homes on a real estate website
- Contacting the bank directly
2. Get Pre-Approved for a Mortgage
Once you’ve found an REO property you’re interested in, get pre-approved for a mortgage. This will give you a better idea of how much you can afford to spend on a property.
While at it, note that you may need a larger down payment when buying an REO property than you would for a traditional home. Banks typically want to recoup as much of their losses as possible. As a result, they may require a down payment of 20% or more.
3. Rope in a Buyer’s Agent
While you’re not required to have a buyer’s agent when buying an REO property, working with one can be helpful. A buyer’s agent is a real estate professional representing your best interests. To this end, they can help you negotiate the purchase price and hopefully keep you from acquiring a lemon.
4. Make an Offer on the Property
Once pre-approved for a mortgage, you can make an offer on the property. Be sure to include a home inspection contingency in your contract. This will allow you to back out of the deal if the home is in bad condition.
The bank may counter your offer. And you can accept the counteroffer or make a new offer if this happens. Be careful not to lowball the bank, as doing so may result in your offer being rejected outright. That could mean losing out on an otherwise good deal.
5. Get a Home Inspection
Before buying any property, it’s important to have it inspected by a professional. This is especially true for bank-owned properties, which may have been neglected for some time. A thorough inspection can help identify potential problems, such as structural or damage from pests.
It can also give you a better idea of the property’s true value. In some cases, you may be able to negotiate a lower price if the inspection reveals significant problems. Plus, even if the property is in good condition, an inspection can still help identify any potential issues that could arise in the future. Be sure to factor in the cost of repairs when negotiating the purchase price.
You may also want to consider getting a property appraisal. This will give you an estimate of the property’s value. You’ll need this information when applying for a mortgage.
6. Do A Title Search
When buying a property, it’s always advisable to do your due diligence by researching it thoroughly. A title search will help ensure the property is free of liens or outstanding mortgages.
It is also a good idea to review the property’s history to see if there have been any foreclosures or bankruptcies. By taking the time to do a thorough title search, you can help protect yourself from potential problems down the road.
7. Finalize the Sale
Once you’ve negotiated the purchase price and obtained financing, you’re ready to finalize the sale. During closing, you’ll sign all the necessary paperwork and pay any remaining fees associated with the purchase of the property. Once everything is finalized, you’ll be the new owner of the bank-owned home!
Buying an REO property can be a great way to get a good deal on a home. But, do your homework and be prepared before you start the process. And by following these tips, you can help ensure the purchase goes smoothly and that you end up with a property that meets your expectations.