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Buying Bank Owned Homes

If you’re interested in buying a bank owned home, there are a few things you should know.

Most banks sell their property as-is, with no or limited disclosures. You’ll usually have the right to inspect the property, but you shouldn’t count on being able to negotiate later on for any repairs.
Which means you need to be approved for a loan with a program that will lend on distressed properties. If you’re trying to purchase with a typical FHA loan, then the house can’t be in too bad of shape or else FHA won’t lend on it.
Many lender-owned homes use their own contracts or required addenda. If at all possible, you should get a copy of this early on so that you have time to read and understand the document. Often, you’re giving up a lot of rights and agreeing to tight timelines in those contracts. Make sure you understand what you’re signing and agreeing to.
Plan on inspecting thoroughly and quickly. Some banks will limit you to only 10 days, so you’ve got to be ready to go, and fast. Since we probably won’t be getting disclosures, you need to be very careful that you know the condition of the property.
The banks tend to not honor their timelines, but you will be expected to honor yours. Some will respond to offers very quickly, some will take weeks to respond. We may have to have some patience and flexibility in dealing with the bank – but they won’t allow any for us.