Bank owned properties are also known as “foreclosed properties” and “REO’s” and like “short sale” properties all come under the heading of “distressed properties.”
Unlike short sales, bank owned properties have already gone through the foreclosure process and the list price you see on the local area multiple listing service (MLS) or through such sites as Realtor.com, Trulia, Zillow and Google, to name a few, is a price that has been approved by the bank who now owns the property, and not established by the listing agent.
While short sales can take weeks or months to get a reply to your offer, bank owned properties usually take anywhere from 24 to 72 hours. Like short sales, a “pre-approval letter” from the buyer’s lender or a letter of “sufficient funds” by the buyer’s lender (when purchasing with cash only), must accompany all bank owned property offers.
There is a bit more paperwork involved as the bank sends back their contract that essentially is an approximately 13 page document underscoring the fact that they (the bank) took the property back through a foreclosure process and makes no representations or warrantees on the condition of the home. However, like a short sale, you as the buyer have a right to inspect the property and if it does not meet your expectations you can cancel the contract at your “sole discretion.”
While bank owed properties or REO’s are not advertised as “auction” properties, banks are not in the business of owning real estate and the list prices are very attractive making competition fierce.
To gain a better understanding of short sales and bank owned properties, feel free to contact us and we can explain the process of acquiring a “bank owned or short sale” property in greater detail.