Buying a bank-owned home can be slightly challenging, but can save you a lot of money.
Bank-owned homes can be purchased for drastically lower prices than other homes. Most homes become the property of the bank when the current owner fails to make payments, or forecloses on the property. While some bank-owned homes have damage that will need to be repaired, many of them are in prime condition. By taking advantage of the low price and quick buying process, any potential home owner can make a beautiful home from a bank-owned property.
Instructions
1. Secure a pre-approval for a mortgage from a bank. A pre-approval will speed up the purchasing process and help you act quickly when you find a low priced property, according to the experts at HGTV's Front Door.
2. Contact a real estate agent and ask them to send you a list of any foreclosed or REO, which stands for real estate owned, properties in their Multiple Listing Service directory. Keep in mind that purchasing a bank-owned home through an agent may be more expensive, depending on the fees the real estate agent charges.
3. Contact banks that own properties and request a list of their properties. The experts at RealtyTrac explain that this is often the best way to purchase a bank-owned home at a low cost, as the banks are eager to sell and accept most offers that cover the outstanding amount of the prior loan.
4. Visit properties you are interested in. Check the house for obvious signs of damage or structural problems, and determine the quality of the neighborhood.
5. Hire a house inspector to thoroughly inspect the property. Even if you're willing to purchase the home as is and pay for any repairs yourself, major structural damage may be more expensive than expected. Report any findings to the bank, and request a lower price if extensive repairs will be required.
6. Determine the cost of the property. Most banks require a buyer to pay the outstanding balance on the prior mortgage, as well as all fees that resulted from the foreclosure process. The financial experts at MSN Money recommend detailing all of the potential repairs and other costs you will spend if you purchase the property, which will sometimes convince a bank to lower their price.
7. Make an offer. Call or fax a letter to the REO property department of the bank. Include which property you'd like to purchase, an outline of any repair or other costs that the house will require and the amount of money you're offering.
8. Negotiate with the bank to create a purchase agreement. Offering to purchase the home in its current state, showing a pre-approval for a mortgage or offering a large down payment may lower the price of the property.
9. Sign a purchase agreement. As explained by the experts at MSN Money, many banks already have a purchase agreement written up for the property, or you can contact a real estate attorney for help.
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