Tips for consumers considering a bank REO

In addition to NAR’s report that home sales increased for the first time in seven months, there was a further glimmer of hope: Applications for mortgages soared nearly 50 percent last week and applications to refinance home loans jumped 82 percent as borrowers scrambled to lock-in lower rates. Economists hope this is a sign that weakened house prices may be tempting buyers back into the market.

A Sacramento Bee story on foreclosure properties offers the following tips for consumers considering a bank REO:

- First-time buyers will need to be pre-approved by one or more lenders.
- Don’t be surprised if the bank that owns the home requires that you finance your purchase with them.
- Expect competition. Many buyers bid on multiple properties.
- Banks won’t accept offers that are contingent on selling your home.
- The best deals generally are those homes with the longest time on the market.
- Bank-owned homes typically sell for 10 to 20 percent less than their listing price.
- Be sure to pay for an inspection and consider the cost of repairs or damaged or missing appliances when bidding on a foreclosure.
- The bank is likely to make a counter-offer. Be sure to consider this when submitting your first offer.
- Some banks will not accept an offer unless it is submitted by a REALTOR®.
- Banks generally are looking to close quickly, within two weeks to 45 days.