Bank owned homes – a.k.a. REO – a.k.a. real estate owned… All of these terms mean the same thing, and they refer to a home that has been foreclosed and the previous owner no longer owns the home – instead the bank now is the owner of the home.
Banks actually don’t want to own homes, and so they list the homes for sale through REO listing agents. When this happens, the homes are available for sale at fair market value.
Many people believe that they can “get a deal” on a bank owned home. From our experience at TW Real Estate Group, this doesn’t appear to be the case too often. If a bank owned home is in good condition, it usually sells for around fair market value.
For the most part, buying a bank owned home is the same as buying a standard home. Some of the biggest differences is that the bank will require the Buyer to sign a Bank Addendum where the sole intention is to protect their own interests. This commonly includes a term where the Buyer would have to pay a per diem (daily fee) for each day that they are late closing – should that happen. This may scare many Buyers, but oftentimes the bank does not even exercise this term, as long as the Buyer acts in good faith all through the escrow.