Also known as REO properties (Real Estate Owned), bank owned homes are the result of an unsuccessful foreclosure process. In these cases, the bank fails to sell the property owned by it after foreclosure. If you are currently in the market for a good house in the Greater Boston Area, a REO property might be worth a look since the bank is usually desperate to get rid of the house. This increases the chances of you getting a better deal than if you purchase a brand new house.
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Process To Purchase a Bank Owned House
- Contact Professionals: Call up or visit lenders and real estate agents, who work in the same city metro where you wish to purchase a REO property, and ask them for a list of bank owned properties for that specific area.
- Visit Personally: While you will not be able to check inside the house without the permission of the bank, you will be able to get a feel of the house and its neighborhood. As you visit all of the houses on the list, keep a track of the ones you like.
- Financial Information: For the houses that you like, search the public records to figure out if any liens exist on the property. If some are present, then you will need to factor these costs into the purchase price.
- Find out Starting Negotiation Price: When you try to purchase a bank owned house, you will need to negotiate in order to get the best price possible. The only way you will be able to negotiate effectively is if you know the minimum amount the bank will need to break even on the property. Find this by adding the cost associated with foreclosure, the liens which the bank had to take over, and the remaining balance amount of the mortgage. Use the number that you get as a starting point for negotiations.
- Get Your Mortgage In Order: Find a good lender in the Greater Boston Area and get pre-approval for a mortgage loan for the amount you will need to purchase the bank owned home.
- Contact the Bank: Call and personally visit the REO Department (sometimes known as asset management department or bank owned homes department). Once you find someone who knows about the properties owned by the bank, schedule a visit to the house that you have finalized.
- Take The Tour: While on the tour, check for any deal breakers such as extensive damage to the basic structure or to rooms that you will have to pay to repair. If after the tour you find the house to be satisfactory for your needs, make an initial offer with the number you crunched up before in mind. Make sure to offer a large down payment.
- Negotiate: Finally negotiate with the officer from the bank until both parties are in accord with the final price for the house, write up an agreement in writing to finalize the deal.
Lender Tip: Contact us for a mortgage loan in the Greater Boston Area before approaching a bank to purchase a bank owned property.