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Bank Owned Homes are also known as: “REO Homes” or Real Estate Owned Homes. I believe that every home buyer should start by looking at bank owned homes. They are some of the best deals to be found around Portland. Bank Owned Real Estate is somewhat of a different animal when it comes to home sales. There are special forms and disclosures. Basically every bank owned home for sale in Portland, OR is “As – Is”. However this does not mean that you can’t get an inspection. Always get the inspection. That way you at least know what you are dealing with. You often times can pull out of the deal and get your earnest money back if the home fails inspection. “Sign Up for Auction Alert” and tell me what area and price range you are in and you will get instant email notification when homes come on the market. Then start house hunting once your pre-approved.

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Bank Owned FAQ’s

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How do I get the list of bank owned homes?

When does property become Bank Owned?

How do banks sell REO homes?

How to determine the condition of a bank owned home?

Why should I buy a bank owned home?

Why are bank owned properties special?

Bank Owned Real Estate is one of the best investment options available for a home buyer, especially in a down market. Bank owned homes are a bit different from you standard day-to-day real estate listings. Here are some things to know:

Usually are vacant
Usually have all liens and judgement cleared
Can offer steep discounts
Almost always sold As-Is/Where-Is
Offers usually written on bank-required forms

Eight Tips for Buying Bank Owned Homes

Savvy home buyers want to find a deal and buy a Bank Owned Home (REO) which are often times under priced. When banks sell homes under Fair Market Value, often times they will get multiple offers thus producing some tough competition. The banks will reject most these offers and either accept or counter offer the highest offer. If we are real lucky, then bank will just accept the highest offer upon receipt.

Get the history - You can often see what the bank put as the sale price on the Trustee’s Deed. Your agent should be able to see this on the tax record. Somewhere in between this amount and the original sale price of what the previous home owner bought it for is what the lender will generally accept.
Run Comps – Ask your agent to run comps on the home. We call it a “Comparative Market Analysis” here in Oregon. Also known as a CMA. I would also ask a title company for some comps too. Two opinions are always wise.
Competition – Are there other offers? This will make it tougher to come in lower. I would say that if there are more than two offers then you would have to come in above the asking price.
Be Pre Approved – Get pre approved from a lender of your choice. If you don’t know one, then ask your family, friends, or Realtor. Submit this with the offer.
Don’t ask for repairs yet – Often times banks will do repairs if you ask, but wait for the inspection period. You have time for this later. Don’t clutter up the offer with this.
Shorten the Inspection Period – Get an inspection the next day if you can. The faster you can do the inspection and move on the more you will be deemed the most serious buyer.
Pay for your own closing costs – If you have used a title company before often times they will give you a discount the next time around. The less you ask from the bank the more it might pay off in equity.
Ask to see the Bank Appraisal – The banks usually have an appraisal from the foreclosure / auction period. This would allow you to see what the bank sees when determining value on a property.

Bank Owned Properties

Ownership: The Lender has title to these properties and with the assistance of a local Broker, all offers will be negotiated by an employee of a bank and the buyer.

Paperwork and rules for submitting an offer: Standard Earnest Money Agreements (a normal offer in Oregon) are usually used, however the bank will have their own addendum’s and disclosures. You must follow the banks rules for writing offers. A broker can get these for you. If you don’t use all the proper documents the Bank may counter offer you or just reject your offer.

Determining a Price for a Bank Property: When a Bank starts the foreclosure process they have a local Broker provide a “Broker Price Opinion”. Most of the time the Bank will price the home just under market value. It is still wise to have your Broker do a CMA to figure out what the market value of the home is. Provide this with your offer to the Bank.

Repairs: The Bank prefers to sell a home as-is. If repairs are needed in order for the property to qualify for a loan, then by all means ask the bank. They might do them or credit you for the amount in order to sell the home. Get bids. Submit them to the Bank so they know you are not just coming up with dollar amounts.

Earnest Money: Get a cashier’s check and a proof of funds for this. Don’t use a promissory note. Submit this with the offer to the Bank.

Closing Date: 30 days is my recommendation. The Bank wants to close fast. This means less holding costs for the Banks and will make your offer more enticing.

Response and timing: Depending on the Banks rules, you can be waiting up to a week or longer. If you are lucky, then the bank will respond within 72 hours. The best thing to do is ask the Broker working for the bank how long it should be.

How do I get the list of bank owned homes?

First, it’s free so don’t ever think you should need to pay for it. To search for bank owned homes just click here and check the box titled “Bank Owned”. If you have specific search criteria or questions about a property send me an email at soldbyaaron@gmail.com. top

When does property become Bank Owned?

This means the bank has already foreclosed on a home and taken the title at this point. The bank then lists the home for sale soon after. It is likely that the home is priced at a discounted because the bank does not want to hold it for very long. Remember to get an inspection. The buyer should also purchase a title insurance policy before closing. These bank owned homes are also referred to as REO properties, Real Estate Owned. top

How do banks sell REO homes?

Each bank works differently, but the goal is the same. Get the home sold. When you write an offer on a bank owned home they will usually “counter offer” automatically. It might turn out to be a higher price than you originally thought it would be. You should always plan to counter their “counter offer”. The buyer’s counter will be reviewed and hopefully approved by the bank and their investors. Response time between offers will take longer on bank owned homes than standard “Retail” listings. top

How do I determine the condition of a bank owned home?

Since banks tend to sell the home in “as-is” condition, a buyer should include an Inspection Contingency. Inspections on bank owned homes are allowed, but as with any inspection, it is at your own expense. This does not mean they will do the repairs. However, at least you will know what you’re dealing with. This inspection period will allow you to terminate the sale if unanticipated damages are revealed. An experienced agent would ask for repairs or a credit for the costs. Sometimes the bank will work with you if it means losing the deal and putting the home back on the market. Remember, banks are trained to say “no”. top

Why should I buy a bank owned home?

The biggest advantage of buying a bank owned home is that investors are purchasing a home without any liens on them. It’s common for the bank to expunge all liens and claims before the property comes to market. Savvy home buyers can negotiate with the bank to discount the price to a fraction of its market value. top

Why are bank owned properties special?

Bank owned real estate is unlike typical listings. Banks are not usually in the business of buying and selling property. They want to deal with the money and funding, not the home itself. Thus providing an advantage to smart home buyers. The bank typically only needs a portion of Fair Market Value (FMV) in order to settle the debt owed from the previous owner. Banks usually try to liquidate these homes quickly to cut their losses and explains most of their aggressive pricing versus a typical listing. top