Bank Owned Homes for Sale are an alternative to Sheriff Sales. A Sheriff Sale is where a city or county taxing unit has foreclosed upon a home where as a Bank Owned Home for Sale is where a bank or other lending institution has foreclosed upon a property. Once a home becomes “Bank Owned” or “REO”, which stands for Real Estate Owned, it has already gone through the process of auction unsuccessfully and the bank or lending institution has “purchased” the home back.
Why would one choose to purchase Bank Owned Homes for Sale instead of Sheriff Sale homes?
- No Hidden Surprises – With a Sheriff Sale, one cannot inspect the interior of the home. Buying a Bank Owned Home for Sale is no different than buying any other real estate agent represented home. You can make an inspection, weigh your concerns and make an informed decision regarding bid price.
- Mortgage – Unlike a Sheriff Sale Home, a Bank Owned Home does not require an “all cash” sale. A buyer can arrange a mortgage for part of the purchase price prior to bidding on the home but a buyer cannot likely arrange a mortgage on a Sheriff Sale purchased home until the right of redemption ends.
- Cash – Sheriff Sale Homes must be paid for 100% on the day of sale in cash or the equivalent (with very few exceptions). Not all buyers have cash on hand for their investments.
- Impulse Buying – Buying at an auction often leads to paying more than you originally planned. It is difficult during an auction to not get caught up in the moment and bid higher. If a property is worth $43,000, and the bid climbs to $43,500, it is difficult to tell yourself not to bid $44,000. After all, it is just another $1,000….and so the story goes.
Why would one choose to purchase a Sheriff Sale Home instead of Bank Owned Homes for Sale
- Price– Although Bank Owned Homes are sold below market value, they are typically not sold as far below market value as Sheriff Sale Homes. For example, in Tarrant County, Sheriff Sale Homes are typically sold for between 30% to 40% of fair market value. Bank Owned Homes can typically be purchased for approximately 65% to 80% of fair market value. That being said, the repairs you may encounter in a Sheriff Sale Home may far exceed the difference in purchase price, or you may obtain a much better bargain at a Sheriff Sale. If you purchase at a Sheriff Sale, you must be willing and able to make that gamble.
If Foreclosure buying IS for you, where do you go to find the Banks’ lists of homes for sale?