Bank Owned House Explained

Nowadays, many people are cutting back on their expenses because of the sluggish economy. Spending less on trivial things is actually a prudent move on their part. With the current state of the country’s finances, one can never be too careful with one’s hard-earned savings.

For real estate investors, meanwhile, one of the best ways to cut back on your expenses when rehabbing properties is to buy a bank owned house. Popularly known as real estate owned houses or REOs, these properties are being sold at rock-bottom prices because the banks and lenders that own them have no choice but to sell them as quickly as possible.

A bank owned home is a property foreclosed by banks and lenders after its homeowner defaulted on his or her mortgage. Unlike ordinary foreclosures, however, an REO failed to get bids at the auction, which forces the bank to take legal ownership of the property in question.

As we all know, banks and lenders are not in the business of selling homes. Being as such, they are required to clear their inventories of real estate. Failure to do so may result in profit losses or sanctions from industry regulators. To avert such a disaster, banks will sell REOs at very low prices to easily attract the attention of buyers. They would rather sell low than not to make the sale at all.



To buy a bank owned house, meanwhile, the first thing you need to do is contact a realtor. A realtor, or a real estate agent, can help you find the cheapest and the best property to rehab. If you don’t know how to make an initial contact with the bank or lender, a realtor can also help you with such a task.

With the help of a realtor, you can now go house hunting. Bear in mind that there are lots of REOs available in a particular area, which is why you need to check out as many properties as possible to ensure that you’ll make the most of your purchase. After you’ve chosen the house that meets your criteria, you should head to the bank with the realtor in tow and express your intent to buy the property.

Another important pointer to remember: never buy an REO without giving it a thorough check-up. Who knows, certain problems might be lurking behind its walls and you’ll get to find them out only when you have already purchased the property. Once the inspection is complete, close the deal with the bank, ASAP.

Buying a bank owned house is indeed a great way to minimize expenses and maximize profits when rehabbing homes. To learn more about these great properties, visit www.REIWired.com.