Bank-owned properties are one of the best ways for a great deal in the Boise area. Bank-Owned properties are also called “REOs” (Real Estate Owned) and “Foreclosures”. Here’s some of the main things to know about these properties.
- Unlike short sales that take several months for offer approval, REO properties typically respond to offers in 2-3 business days.
- Closings are typically 30-45 days.
- All offers must include a pre-approval letter or proof of funds if paying cash (bank-statement, letter from banker, etc.). If you’re financing and have not yet been pre-approved that’s the first thing to take care of. You can find some lenders I recommend here.
- Properties are sold “as-is”. You can still have an inspection contingency but they don’t want you to ask for repairs and they won’t warranty anything.
- The two biggest factors in determining how much can be negotiated off bank-owned homes is (1) how long has it been on the market and (2) when was the last price reduction. Banks usually lower the price about every 4 weeks. If it’s brand new on the market or the price was just lowered they will typically be more firm.
- If buying an REO in the winter there may be some components of the house that cannot be tested during the inspection. For example, the sprinklers may not have been blown out and you may not discover freeze damage until later. Or, you may not be able to test the air conditioners compressor unit if the outside air temperature is below 45 degrees.
- Banks usually favor cash or owner-occupied offers.
- The initial offer is made in writing and the subsequent negotiations are handled verbally. Once there is verbal acceptance, the banks will typically not review any other offers. The bank will then send their addendum(s) to the buyer and once the buyer has executed all the documents the agreement will go to the seller for signature.
- Buyer closing costs can be negotiated into the sales price.
- Banks have inefficient bureaucratic systems. You’ll need some patience, but with an experienced agent, their quite easy to navigate.
Disclaimer: Please keep in mind that every bank and/or asset manager is slightly different and this information is a generalization and not a guarantee or warranty of any kind.
I would be happy to answer any questions you have. Please don’t hesitate to contact me.