Is an REO/Bank Owned property always a good investment?
Not always!  Many bank-owned homes are usually not in the best condition, having gone through a long process of owners getting behind on payments (usually not being able to make repairs), then going into the pre-foreclosure process (where the homeowner gives up on the upkeep of the house), and finally to the emotional (and often turbulent) exit, right around the time of the foreclosure auction.  If you have the cash to make repairs (and get a good enough discount price-wise), then yes, a bargain can be had!  However, if you are a first-time homebuyer without a lot of extra money for necessary repairs to make the house live-able, then it doesn’t matter how much of a discount you are getting, steer clear!  While there are some loan programs (ie. 203K) that finance the repair money in with the home loan (making it do-able for some buyers) most loan programs require an appraisal that may have property conditions to “pass the test”.  Most REO properties are sold in ‘as-is” condition, meaning the sellers will not make any repairs…even for appraisal conditions. 

Posted By: Greg Hatcher on Thursday, October 22, 2009