Home Buying in 12550>Question Details

Faye, Home Buyer in Newburgh, NY

how can i buy foreclosed property from a bank?

Asked by Faye, Newburgh, NY Sat May 12, 2012

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Since most foreclosed homes are listed with a broker, consider working with an agent of your own; if purchasing with a mortgage be aware that a mortgage pre-approval letter is required in order to determine your price range and for any offers to be taken seriously.
1 vote Thank Flag Link Sat May 12, 2012
Hi Faye. Foreclosures or REO'S/OREO'S are being handled by real estate agents. So even if you find a website with those, and many are greatly misleading, you will have to contact each agent for each property you would like to see SEPARATELY. Why would you do such a thing? You should find ONE real estate agent and let her/him find what you are looking for. The bank in question pays the fee after all AND you have a good negotiator on your side for free... Let me know if you need more detailed info.
1 vote Thank Flag Link Sat May 12, 2012
Most of the time banks will list with an agency. If that is the case you can hire a Realtor to represent you (in NC the Buyer's representative is paid for by the seller as a part of their selling expenses) in that transaction. There are also websites where you can view homes that are bank owned and submit offers online. Also, there are websites where you can view homes that are getting ready to go into foreclosure......in NC they are usually the Attorney's handling the foreclosure for the banks. In the end, consulting a Realtor before you try to purchase a home in foreclosure from a bank will help streamline the transaction and keep you from going crazy in the process.
1 vote Thank Flag Link Sat May 12, 2012
So you're asking how can you buy a bank owned property. They list it for sale as bank owned property on the local mls systems with a Realtor. You make an offer just as you would on any listed property and the seller (bank in this case) decides if they will accept it or not. It's pretty much that easy. You will have had to have spoken with a lender and gotten a preapproval letter to submit along with the offer.
1 vote Thank Flag Link Sat May 12, 2012
REO stands for Real Estate Owned, meaning the ownership of the property was transferred involuntarily to the lender through a foreclosure sale. The lender now has title to the property and is selling it directly, usually through a listing agent in the local MLS but sometimes through an auction site on the Internet.

When you make an offer on a REO, the bank's asset manager, not the listing agent, makes the decision on how the offers are handled. Even if you are told your offer is being accepted, it is not binding until both buyer and the bank's representative have both signed and initialed the contract AND all riders and addendums. It sometimes takes days or even weeks for the bank to get a fully signed contract back to the buyer's agent. During that waiting period, other offers can come in. Each bank sets their own policy as to how additional offers will be handled. Your offer should be accompanied by a Proof of Funds letter if paying cash or your Pre-Approval letter from your lender if getting financing.

When you do get an offer accepted by the bank on a REO property, the bank/seller will generate it's own addendums to the contract, which the buyer must accept without changes in order for the transaction to move forward. These addendums frequently alter the inspection period, modify the sellers warranties to reduce seller's liability, add mold or other environmental disclaimers and frequently change deadlines within the contract. Often they include language that makes the buyer's deposit nonrefundable after the inspection period. There's typically a disclaimer that buyer is responsible for obtaining any HOA or condo docs at buyer's expense. Most have specific waivers of certain buyer rights, such as filing legal action against the bank for failure to close (specific performance). They also put language in that allows the seller, at seller's sole discretion, to extend the expiration date on the contract.

For all of the above reasons, it's a good idea to seek out your own real estate attorney that is familiar with REO sales to review the bank's addendums with you BEFORE you sign and accept the terms.

Find an agent that is experienced with REO sales to guide you through the process
0 votes Thank Flag Link Sat Jan 3, 2015
This is so informative. Thank you Diane!
Flag Wed May 13, 2015
Mel Smith

0 votes Thank Flag Link Sat Jan 3, 2015
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