| People looking for cheap houses might think that | | | | living there, the buyer would have to take care of |
| buying bank owned homes is the best way to cut | | | | the business of getting them to leave. There may |
| down on purchase price. At first glance, foreclosed | | | | also be taxes owed on the property, which could |
| properties are relatively cheaper than existing homes, | | | | also be the responsibility of the buyer. |
| but more often than not, there are hidden costs that | | | | With these considerations in mind, a buyer might be |
| could increase the price that a buyer would have to | | | | better off purchasing an REO than making a bid on |
| put down to acquire a habitable structure. | | | | an auctioned property. However, there are still things |
| Characteristics of houses sold by banks | | | | that should be considered when buying an REO. First, |
| When auctioning a foreclosed home, banks would | | | | a buyer should compare the purchase price with |
| usually include the balance of the loan and the | | | | existing home prices in the neighborhood to make |
| interests earned in the initial auction price of the | | | | sure that the REO property is cheaper. |
| dwelling. Lawyers' fees and housing organization fees | | | | Next, the condition of the home should be taken into |
| are also often included in the initial auction price. | | | | consideration. If the buyer will spend more on |
| Almost 50% of foreclosed properties being auctioned | | | | repairing it to make it habitable than if he or she buys |
| are not sold on the actual auction itself since most of | | | | an existing home, then it will be wise to reconsider. |
| these properties are worth less than what the | | | | Also, buyers should be wary of the inserted clauses |
| former owners owed to the bank. In cases like | | | | in the contract that will give them additional |
| these, the property will revert to the financial | | | | responsibilities that were not mentioned in the initial |
| institution and will become a real estate owned (REO) | | | | talk. |
| home. | | | | When buying bank owned homes, it is best to have |
| What buyers should pay attention to | | | | a real property lawyer who will look in on the finer |
| If buyers purchased one of the bank owned homes | | | | prints of the contract. Buyers should also make a |
| under auction, they will receive the house in an "as is" | | | | physical inspection of the property before agreeing |
| condition. This means that if the former owner is still | | | | to buy the house. |