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Should You Purchase Bank Owned REO Properties

By Shirley Long


Finding a home at a reasonable price is challenging in these difficult economic times. Depending on the area you live in you may find properties that are modestly priced as well as those that are out of your budget range. You may be wondering should you invest in bank owned reo properties and just what does this mean.

To find reo properties you may contact a real estate agent who has this information or look on the multiple listing service or MLS websites. You may also check your local banks as many of them have a section on their websites dedicated to reo properties or you can find a real estate selling service online that lists properties in your local area.

You should not go into a home purchase blindly, but do have the property inspected thoroughly by a professional home inspector. They will assess the property inside and out and give you information regarding its general condition and any repairs that need to be made or let you know if there is structural damage that has occurred. Many REO properties are distressed and in need of many repairs so be aware of this when you are looking at these kinds of home.

Very seldom these properties are in move-in condition, but when they are the bank may want a premium price for this kind of property. You may be able to get the bank to lower the interest rate or discount some of the closing costs to reduce your financial obligation if you decide to purchase. Generally, however, there will need to be some repairs made to the property as most are not in move-in condition.

These properties that were once foreclosures on the market that did not sell at auction, may have multiple problems wrong with them but they are problems that can be fixed with the right contractor and funding. Many banks will invest in the property themselves by paying off any taxes owed on the title and making any necessary repairs in order to sell it. Most of the time though, the property is sold as-is and do not come with any warranties.

Once you find a property that you are interested in you should perform your own title search to ensure that there are no liens or outstanding taxes owed on the property as you would be liable to pay them once you purchased it. Make sure that the title is clean and clear. Always do your own due diligence as the bank is not responsible for doing these tasks for you.

If the bank offers the home at a discounted price, you should still seek to have the property inspected by a professional before you purchase it. This way you will know the total cost if any of having to repair or renovate the property and you can include this cost in any loans you may obtain from the bank.

Qualifying for a bank loan will depend on your credit rating and if you qualify you may also be able to get better interest rates on the home and the extra financing that you need for repairs. This will save you the cost of having to make the repairs to the home out of your own pocket.




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