Buying a bank owned property could save you money but it has it’s own risks and quirks to be aware of.
1. Condition: Many REO [real estate owned by a bank] properties are in pretty tough shape. They almost always have the water and heat turned off so don’t expect a warm fuzzy feeling when looking at an REO. These houses might also have fixtures and appliances missing so factor that in to what you’re willing to spend.
2. Disclosure: Banks are exempt from giving the buyer a property disclosure. Make sure you get a thourough inspection of the property.
3. Shorter inspections and higher costs: To inspect a home you need the water on and that cost is passed on to the buyer with most REOs.
4. Financing: Some banks offer financing deals on REOs but many don’t treat these any differently. If you are using an FHA loan make sure there aren’t broken windows or holes in walls – this will cause problems with an appraisal.
5. Look at everything: Just because it says REO doesn’t mean its the best deal – look at everything before making a decision. Start Looking Now