Sound Off: Should I buy bank-owned properties?

A: Purchasing a bank-owned property can be a great opportunity to purchase a home or make an investment considerably below value.

When offering to purchase a bank-owned property, a buyer should be prepared to be very patient and do their research. Where a typical escrow can take 30 days, a bank-owned sale can take many months for the sale to be approved.

It’s in the buyer’s best interest to hire a Realtor who handles bankowned sales to guide them, especially if they’re not familiar with the foreclosure process.

A bank-owned property is typically vacant and the previous owner probably did not have the funds to take care of the home so often there is deferred maintenance.

Since the bank has not lived in the home they will not have standard seller disclosures or know the history of the property.

When making an offer, a buyer should include a contingency to do inspections unless a buyer wishes to do inspections prior to writing their offer. Get estimates for the work that needs to be done to factor into the purchase price — and your budget.

Kathleen Daly, Coldwell Banker, 415-519-6074,

kdaly@cbnorcal.com; Lisa Lange, Coldwell Banker,

(415) 847-7770, lisalange@coldwellbanker.com.

A: I’ve sold a few hundred bankowned properties (REOs) and I don’t see many pros of buying an REO over a traditional sale.

The consumer’s impression tends to be that they are a deal or even a steal.

The concept of deep discount real estate shopping is simply not accurate.

After the economic meltdown of 2008, the banks had much stricter selling guidelines. They are required to answer to investors so they hire real estate agents to price and market the properties, therefore, properties are priced at market value or even sometimes above.

The condition of most REOs is less than average. Sadly, most property owners weren’t in a financial position to take care of the homes so there is a tremendous amount of deferred maintenance.

It is strictly up to buyers to do their investigation as banks are not required to disclose any defects.

However, this could be a benefit for value-add buyers.

Mary Lou Castellanos, Sotheby’s International Realty,

415-901-1769, marylou.castellanos@sothebyshomes.com

A: Many buyers go on the hunt for bank-owned homes as they think they are getting a deal. This oftentimes can be true, but there are also pitfalls to be aware of before jumping in to the market.

Because the banks are selling the properties, there tends to be a lack of information or disclosures. Buyers will need to do all the investigations themselves and take it as is; likely the bank will not be negotiating either, which is why you can typically get them for below market prices.

Sometimes these houses are in severe disrepair and with a lack of information, the new buyer is taking on all the risk. The buyer should be aware that the bank is only out to protect themselves, but as with all sales, buyer beware. There are also many moving parts to closing a bank-owned transaction and many times delays are common.

A the end of the day, bankowned properties offer an opportunity to purchase a property for below market, but with any too good to be true deal, there are always setbacks, which cause one to question: “Am I really getting a good deal?”

Zara Rowbotham, Vanguard Properties, 415-418-8865, zarasrealestate@gmail.com.