Over the past 6 years the real estate market has seen a large percentage of bank owned properties. Many buyers are choosing to strictly look at bank owned properties in hopes of getting a good deal. There are great advantages and great risks in buying a bank owned property.
Lower Price– Many times a bank owned property will be listed at a much lower price than regular sale properties. Financial institutions lose money every day that they have a property sitting on the market. Therefore banks are more likely to sell at a more competitive price.
Already Bank Owned– This may seem redundant, but the fact that the ownership has been completely transferred to the bank will lessen the amount of time before closing. In a short sale a buyer must negotiate with both the seller and the bank, this makes for a much lengthier process. Likewise if a home is in the midst of foreclosure proceedings this will prolong closing.
Upgrade the home to your taste– Another advantage to buying a bank owned property is that you can upgrade the home with personal design preferences. After saving money in the purchase of the house, you can choose what type of granite countertops you’d like or whether or not to get a jetted tub in the master bathroom.
May not be in move in condition– Many times homeowners will trash a house during foreclosure. They may kick in the wall, completely ruin the carpets and even take different electrical and plumbing fixtures out of a home. If you are buying a bank owned property as is you may need to fix any damage that was left by the previous homeowners.
Potential lipstick job– Often a bank will hire a contractor to come in and do cheap and quick cosmetic renovations on a property. Their goal is to make the home show well on the real estate market. While it may make the home look move in ready, the finishes and products that were used may extremely cheap and installed hurriedly.
Unknown history of home maintenance– Once the property is bank owned it is unclear how the home was maintained by the previous owners. Getting a thorough home inspection done will allow buyers to feel secure about the condition of the home.
Buying a bank owned property is much like any other real estate transaction, there are great risks and rewards involved. Weigh the factors of the bank owned property you are interested in to determine if it is a right fit for you.