What are the disadvantages of buying a house that was repossessed by a bank?

Question

I am looking into buying a house repoed by a bank. However, I have some misgivings about it. My main concerns are with any unrepaired damages that the owners couldn't pay for. Other concern is the former owners. Maybe they'll have a beef against the new owner?

Answer 1

The previous owners are long gone before it is sold. Why would they have a beef with you anyway? They are the ones that decided to not pay their mortgage. They are the only ones they could possible have a beef with.

The biggest problem with buying from banks is that it takes forever. It could be 3 months before they even respond to an offer. Also, they will reject anything with any contingencies other then inspections.

Also, you have to remember that serious irresponsible people once owned the property. If they did not feel it was important to pay the mortgage that also tend to think household maintenance is not all that important either. The house can be rather run down in a hurry. But, you do get to view it like any other house and ask for the basic inspections as well.

Answer 2

Buying A Repossessed House Process

Answer 3

Often times there is a misconception or the lack of knowledge to differentiate between a foreclosure home and a "real estate owned" property (aka: bank owned property). Some of the major differences between the two is the accesibility to the property, the amount of risk involved, the purchase process, etc, etc.

Normally a property that is in the process of being foreclosed, will still have the previous owners living in the property either refusing to leave or wanting to stay until the last day possible. Once the property goes into foreclosure and it has already been auctioned off, you as the buyer are responsible for any liens not discovered before hand, you are responsible of evictions, and any major repairs.

As oppossed to REO (real estate owned), you have the benefits of purchasing a homes that has already been cleared of any tennants/sellers still wanting to stay in the property, you can have more security that there are no other liens not disclosed or discovered previously and most of the times the major repairs (sec 1) will be taken care of in advance because the lender wants to sell the property quick and not wait 4-6 months waiting.

If this property you are looking to buy is a REO, you should find that the property is vacant and you should not worry about any evictions needed.

Good luck

Answer 4

I just bought a bank owned house. I had a home inspection done to make sure nothing was a major repair. You have to pay for that upfront but it is well worth it. I bought my home in the snow and we couldn't run the air conditioner without damaging the pipes. Everything was solid as the home imspector said. Two days after the closing, I had a waterfall coming from my ceiling. The water heater leaked and came through my family room ceiling. I had the water heater replaced (new) for just the service call of $50.00. That is why you also get a home warranty when you purchase your home.

Now its summer and I have found out my A/C doesn't work. Lucky for me if I have to have it repaired of replaced it will only cost me $50.00 service call.(get the picture).

The previous owners can not come back against you otherwise you can take legal action against them.

All I needed for this house was paint and carpet, and I installed stainless steel appliances.

Since then,I realized what a great bargain I had because I bought for not only $3,000 under what it appraised at, but since I bought (3 months), my house is valued at $38,000 more, and the house down the street that went on market just recently has risen again to $57,000 more in value.

Plus I found out that the previous owner had 18 adults living here as a halfway house for Mexico, but I had two small holes to repair in the wall,paint and carpet only to do.


Funny how things turn out.

Answer 5

Hopefully you will never see or hear from the previous owners. They must have moved elsewhere.

Have you looked in the house? Are there damages? If so you can use that as a point to negotiate the price of the property. Also, be sure to get a profesional inspector to inspect the house before you buy regardless of if its a repo or not.

Answer 6

I don't think the previous owners will have beef against YOU but if they have to be forced out, well I have heard horror stories. Some of them take everything... and I mean everything like sinks and doors. Some trash the place, like smashing holes into walls.

And like other people here have already mentioned, if they didn't have money to pay the mortgage then more than likely they didn't keep up with the maintenance.

Just be prepared for the what-if and have some available reserves for repairs.

Good Luck.

Answer 7

Sometimes not much. Talk to a Realtor and make sure that you have a Home Inspection done. Sometimes reposed houses are treated poorly. Check the roof basement and signs of rough treatment. Turn all the water and flush toilets on top floor keep running until you get to the basement and check for leaks etc. check out www.zillow.com to see approx. what the house is worth. Altough this site is not right on target all the time it's a quick and very easy CMA

Answer 8

I wouldn't worry too much about the former owners haunting you. However, the condition of the house should be a big concern. Often when homeowners know they're going to lose their home, they stop doing any work on it, whether or not they can afford it. Foreclosed homes are frequently in very bad shape because of that.

Answer 9

Most repo homes, are sold as is.
Most of them are never in good condition. I doubt the former owners will haunt you down, most of the time they have moved far away because of embarrassment, so I won't worry about that.

Answer 10

that is a disadvantage you cant tell them this has to be fixed before you buy it. it would be like buying a used car as is.