1. The first thing that you need to recognize when purchasing a REO (Real Estate Owned) or bank owned home is that you are dealing with a large group of people and not just one seller, so you need to be patient throughout the process.
2. Work with a buyer’s agent. While bank owned properties are listed with real estate agents, these agents are typically just the middlemen and don’t do much negotiating. You are best off retaining your own representation with a buyer’s agent that will do the work for you.
3. Be prepared for extra pain and suffering. The bank isn’t going to pay for anything, or doing anything with the house. Make sure that you have the additional time and energy that is required to deal with a bank owned property.
4. Have some extra cash on hand. Since the bank isn’t going to pay for anything, you should be prepared to pay for some things that you normally wouldn’t have to. (i.e. If you are purchasing a home in a rural setting, you will likely pay for the septic and well to be tested on your own.)
5. Be prepared for delays. If you are going to be moving into the bank owned home after you purchase it, you need to make sure that you don’t cancel the lease on your current home. If you are selling your current home, wait until the bank owned home has closed first if it is at all possible.
6. Read the bank addendums thoroughly. Nearly all banks will require you to agree to additional language that is not part of standard purchase and sale agreements. While this language is not negotiable, you need to know exactly where you stand contractually during the entire process.
7. After you close on the sale, contact your local tax assessor. It is likely that you purchased the bank owned home under the assessed value. If you file with your local tax assessor immediately after the sale you stand a good chance of reducing your property taxes.