Due to the low inventory in this area and the rise of “bank owned” homes, many buyers like yourself may come across these types of homes. They can be a good investment if you fully understand the process and have the time, money and patience.

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“Bank owned” type homes still only make up about 7 to 8% of the total real estate market in Central New York. Many of these homes are reserved for “investors.”

**It is imperative that you read and understand this before placing an offer on any pre-foreclosure, short sale, or bank owned home**

  • What is a Pre-Foreclosure? A pre-foreclosure is a property in the process of foreclosure but is still legally owned by the owner.
  • What is a Short Sale? A short sale is when an owner is selling a home less than the mortgage owed on the home. Lenders may agree to take a short on the mortgage to release it for sale. This is a process before the property is actually foreclosed.
  • What is a Pre-Foreclosure Auction? A pre-foreclosure auction is set when the owner fails to satisfy their loan terms with the lender. Most pre-foreclosure auction are handled at the courthouse in the County where the foreclosure occurred. Most homes at pre-foreclosure auctions are taken back by the bank and sold at a later time as a bank owned home (REO)
  • What is a Bank Owned Home? A bank-owned or real estate owned (REO) property is one that has reverted to the mortgage lender after the home fails to sell in a foreclosure auction. Once the bank owns the property, it will handle eviction, if necessary, pay off tax liens and may do some repairs.
  • What is a HUD Home? A HUD home is when a government-insured loan (FHA) gets foreclosed and the Federal Housing and Urban Development pays the defaulted loan off, and then puts the home on the market.
  • What is a VA foreclosure? The Veterans Affairs helps veterans buy homes by guaranteeing loans to the lenders. When a veteran defaults on a VA-guaranteed home loan, the VA buys the property from the lender and offers them for sale

Common Questions

  1. Are Bank Owned Homes Sold AS-IS? Yes, all bank owned homes are sold “AS-IS” which means that the seller will not do any repairs to the property.
  2. Can I still perform an inspection and “walk away” if the house needs too much work? In most cases, the contract can not be contingent on a home inspection, and you can not walk away. There are some circumstances, where the bank will allow you to complete an inspection and “walk away” if needed. Be prepared to do an inspection and perform your own “due diligence” in advance before you make the offer.
  3. Will the bank turn the water and power on for the inspection? Maybe, but in most cases it will be your responsibility and cost to “De winterize” a property and “Winterize” again before the closing. In most cases, the bank is not responsible to have the power and water on. **Please understand this*
  4. Will the bank accept an offer if I have a home to sell first? No, all offers must be “non contingent” regarding your home sale.
  5. Will the bank pay for the buyers closing costs? Most banks will not pay the buyer’s closing costs. However, there are some special programs through “HomePath” and other Fannie Mae foreclosures. Also, you may be able to add the closing costs to your mortgage and increase the offer price. Consult with us regarding this.
  6. Do all lenders and mortgage companies offer financing for bank owned homes? Depending on the condition of the property, the lender may or may not offer financing. There are special programs for renovation type loans and some banks will provide their own financing. Consult with your lender regarding this.
  7. Does the bank provide a marketable title and survey to the property? In most cases they would not provide a title and or survey only a warranty deed. This additional cost could be between $1,000 and $1,500 or more. Please consult with your attorney.
  8. How are offers made for bank owned homes? We would make the offer for you and send you an necessary paperwork to sign. Most offers require a lot of paperwork and made online and through electronic signature in some cases.
  9. Are there deadlines to submitting an offer? Yes, many times there will be an offer or bid and paperwork deadlines. We will let you know of these deadlines.
  10. Can we adjust or change our offer once it is submitted to the bank? Most times the offer will be “highest and best” especially, when there are multiple offers or an auction style bid. We would consult with you regarding this.
  11. How long does it take the bank to decide on the offers? It can take days or weeks. Please be patient!!!!
  12. Do I have to show a bank pre approval or proof of funds with an offer? Yes, no exceptions.
  13. Will the property taxes reduce once we purchase the property? Probably not, as the property taxes are based on many factors, and the assessor may not adjust to the lower purchase price. Be prepared!!!
  14. How long does it take to close on a bank owned home? It depends, but the typical time once the contracts are accepted by all parties is about 60 days.
  15. What are some of the websites to find bank owned homes? There are many websites. Here are the most popular: homestore.com, auction.com, Xome.com, Homepath.com, Hubzu.com
  16. Once the offer is made can I continue to look at other homes and make an offer on another home? Yes, you are not obligated to purchase the home, until the bank agrees to accept your offer and you can cancel the offer at any time.

For More Information - Call Bob McTague at 315-882-6610