Bank owned homes or Real Estate owned homes are properties that have come under the ownership of banks as a result of foreclosure.
When home owners fail to meet their mortgage obligations, the bank has the process of foreclosure as a remedy in order to recover their loss.
The proceeding starts with a notice of default followed by a notice of foreclosure when the home will be auctioned off to the public.
Not all homes put up for sale at auctions end up getting sold and so the homes that do not sell at these public sales become bank owned homes.
Since banks are not normally in the business of selling homes the properties are categorized as non-performing assets which are offered back to the market through bank appointed Real Estate brokers or listing services.
The Elements of Bank Owned Homes When homes become the property of the bank, the mortgage is extinguished.
Their value is appraised and the price set at fair market cost.
Banks will usually offer title insurance to buyers as well as a pest certification.
Some banks even bear the cost of cosmetic repairs to make the homes more attractive to prospective markets.
Banks will let buyers stipulate a clause that will empower them to pull out their offer based on the outcome of the inspection, and buyers should make sure they have this specific clause on their contract.
Banks will also handle the task of evicting former occupants so that the property is ready for the new owners.
Some points that buyers can negotiate on when buying bank owned homes include the contract price, the interest rate and the payment terms.
If the buyer's goal is to purchase properties with the least amount of stress, then Real Estate owned homes should be on top of their list of options.
The negotiations for these properties are straightforward and fast so that buyers can concentrate on other things like moving into the home.