Purchasing a bank-owned property (aka REO) can be a great opportunity to get a discount on a home. But before you jump in, look at these things:
- Get a Home Inspection
Never skip the home inspection. If you retain anything from this article let it be this, home inspections are vital to evaluate the exact conditions of the property. Banks typically won’t make repairs before the sale. A professional home inspector should evaluate all major systems, electrical, HVAC, roofing, and especially plumbing. If plumbing can’t be tested due to water being shut off, be cautious. Keep in mind, hidden leaks or damaged pipes could lead to costly repairs down the line.
- Focus on Function, Not Cosmetics
I know you want your finishes to be shiny but you must not get distracted by outdated paint colors or worn flooring. Cosmetic issues are usually easy and inexpensive to fix. Instead, prioritize the focus on structural integrity and functionality of the home. A solid foundation and working systems are far more important than a fresh coat of paint.
- Scout the Neighborhood
Take a walk around the area, what do you see? Are there multiple foreclosures nearby? A high concentration of distressed properties can affect the value of your home and the overall vibe of the neighborhood. Look for signs of stability and well-maintained homes, active neighbors, and local amenities.
- Don’t Stress About the Title
One advantage of buying a bank-owned property is that the title is usually clean. The bank will ensure the title transfers free of liens or encumbrance, aside from any that have been disclosed.
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