Buying a Foreclosure or Bank Owned Home in DFW

What is a bank owned home?

When a homeowner can't pay their mortgage and the home goes through foreclosure without selling at auction, the lender takes ownership. At that point the property is called real estate owned, or REO. The bank then lists it for sale, usually through a local agent who specializes in REO properties.

Bank owned homes can be priced below similar homes nearby, which is why buyers and investors look for them. They also come with a few differences from a typical sale, and knowing them up front saves time and surprises.

Most REO homes are sold as is

Banks have never lived in the property, so they rarely make repairs or offer credits. Many also don't complete the standard seller's disclosure that a homeowner would. Plan on the home needing some work, and budget for it.

Always get an inspection

Even when a home is sold as is, an inspection tells you what you're buying. In Texas, the option period in the standard contract gives you time to inspect and walk away if the results aren't what you expected. Check the roof, foundation, plumbing, HVAC and electrical, and look for signs of water damage or missing fixtures, which are common in vacant homes.

Know your financing options

Cash buyers have an edge on bank owned homes, but financing works too. Conventional, FHA and VA loans can all be used, as long as the home meets the lender's condition requirements. If the property needs major repairs, a renovation loan may be an option. Get preapproved before you make an offer; banks want to see proof of funds or a preapproval letter with every offer.

How offers work with a bank

• Responses take longer. Offers often go through an asset manager and sometimes several approval levels.

• The bank will usually add its own addendum to the contract. Read it carefully; it often limits the seller's obligations and sets deadlines.

• Multiple offers are common on well priced homes. Your agent can help you decide when to offer at, above or below list price.

• Earnest money and option fees work the same way as a regular Texas sale, but deadlines can be strict.

Title, HOA and utilities

Foreclosures can leave behind unpaid HOA dues, liens or utility issues. A title policy protects you, and your title company will clear most issues before closing. Ask early whether utilities are on for inspections; vacant REO homes sometimes have them shut off.

Is a bank owned home right for you?

REO homes can be a great value for buyers who are ready for some repairs and a slower, more formal process. If you want a home that's move in ready with a seller who can answer questions, a traditional listing may be a better fit. Many buyers look at both.

How Texas Realty One helps

Texas Realty One works both sides of the REO market. On the bank side, REO specialist Mauro Gonzalez Largher manages bank owned listings across North Texas, so the brokerage knows how asset managers review offers and what gets accepted. On the buyer side, Texas Realty One agents help you find bank owned homes, run the numbers, schedule inspections and write offers that banks take seriously.

Ready to look? Search homes for sale in DFW, or contact Texas Realty One at (817) 236-1515 or Info@TexasRealtyOne.com.