Are bank-owned properties really good investments?

Many people assume that because a property is owned by a bank that it is priced under market value and probably a good purchase. However, before you assume that buying a bank owned property consider the following:

Many of these properties have been physically abused by the past owners. Many times we have seen that as a result of financial stress and broken homes, the previous occupants have ripped out kitchen cabinets, pulled out toilets, taken out appliances, and generally have left the property needing new paint, flooring, and roofing, too. All of these items cost money.

Remember, it is only after escrow has closed that many investors have discovered what actually lies behind the closed walls and all the damage that is there and needs to be repaired.

In order to make sure you are not disappointed, make sure you do the following before closing an escrow:

1. Utilize a real estate agent that is a Certified Distressed Property Expert. This is a special designation earned by individuals that have take the time to understand these pitfalls in the new REO market.

2. Get a property Inspection by a licensed Home Inspector, pay the extra money(between $250-$400) to get a professional opinion on faults with the property. After you have done this, you can always renegotiate the sales price.

3. After you have the Home Inspection in your hand, get a professional bid by a licensed Contractor to let you know exactly how much money you will need to repair the property, again this is another negotiation point that you can go back to the Bank and discuss if the costs are excessive.

4. Remember to get a Termite report. These pests can cause thousands of dollars of damage that can be hidden from the naked eye. I have seen termite work on a home that costs over $5000.00 Many Banks don't want to pay for this kind of work.

Kirk Mulhearn is a real estate broker practising in Southern California. You may call him for a free list of bank owned properties:

Kirk Mulhearn
3728 Atlantic Ave.
Long Beach, Ca. 90807
562-989-4091 ext. 110

kirkmulhearn@gmail.com