The Myths About Buying a Bank-Owned Home
REO homes, also known as foreclosures or bank-owned homes, are properties that the bank has taken reposession of. Repossession happens when a previous owner cannot make their mortgage payments, and the lender eventually takes ownership of the property. There are many misconceptions about purchasing a bank-owned property. We asked the REO experts at Calcagni Real Estate to share the myths they encounter with their clients. If you think you know everything about REO properties, read on. Today, we’re setting the facts straight; you might be surprised.
MYTH – REO Properties Sell for a Discount
Calcagni Real Estate’s REO Director Larry Madow says that misconceptions are a common problem in the foreclosure market. One common misconception he experiences is the belief that foreclosed homes sell for a deep “discount.” The truth is that foreclosed homes often sell at market value. Unless there is considerable damage to the home that the bank chooses not to repair before selling, the home will likely not list for below market value.
MYTH – All Bank-Owned Homes are in Bad Shape
Many homebuyers overlook REO homes because they believe they are all in poor condition or will need a complete overhaul. While it is true that previous owners may have been unable to keep up with repairs, many banks are remodeling the homes they take ownership of before selling. Banks understand that potential buyers will avoid homes with heavy damage. It is becoming more and more common for banks to make basic repairs and upgrades before listing homes for sale. Check out the photos on a bank-owned before you write it off. You may be surprised to find new countertops or refinished floors!
MYTH – You Can’t get an Inspection on a REO Home
Calcagni Realtor Rachel Wardwell is another expert agent who works with buyers in the foreclosure market. She says she sees many people who believe you are not allowed to do a home inspection on a bank-owned home. Buyers have the right to do a home inspection and request repairs, but banks often list homes as-is and will not make requested repairs. Home inspections are helpful when looking to purchase a home where there may be limited information, such as a foreclosed home. For more information regarding home inspections, check out our recent blog!
MYTH – You Can’t Get a Mortgage on a REO Home
Some homebuyers don’t even consider a bank-owned property because they believe they cannot get a mortgage for one. This misconception does have some truth to it—homes that go for public auction often require an all-cash purchase. However, many of the bank-owned homes you see for sale are not going through the public auction process and do not need a cash purchase. Depending on the condition of the home, there may be limitations to what type of financing you can get. Don’t pass on an REO home before speaking with your Calcagni Agent. There are often many financing options available!
The myths about buying a bank-owned home can be confusing. But they don’t have to be! Do you want to learn more about purchasing a REO home? Contact the experts at Calcagni Real Estate. We have the knowledge to answer all your questions and the skills to help you find your dream home.
