Why Buy a House that the Bank Owns?

Mar 6th, 2008 @ 6:41 AM by MortgageMentor

With all the homes that are going into foreclosure these days, there are tons of bank-owned properties, called REOs, for sale. As a buyer, there are good reasons to purchase these properties — the main one being that the banks will sell them cheap. Let’s see why.

Banks are not in the real estate business, so they are not interested in making a profit from the sale. They just want to get their money back, and the money the bank has invested in the house is often significantly lower than the market value. Also, owning the property is a risk for the bank, since vandalism and simply lack of repair may lower the property’s value even further. So the bank is willing to give you a good deal.

To buy property from a bank, you can inspect it yourself and also hire professional inspectors as appropriate to be sure there are no major problems. So you are safe — possibly safer than if you bought the home sight unseen on the courthouse steps. Whether you buy the REO as a house to flip or as your own home, if you are in the market for property an REO is a good choice to consider.