How to Make an Offer on a Bank-Owned House

Buying a bank-owned home has advantages.
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A good deal is hard to pass up, and a bank-owned home may be just the right deal when you and your sweetie are looking to settle down. Before you make an offer, understand the process, as buying a home that's been foreclosed upon doesn't follow a simple path. In addition, it's not for the impatient. If you're looking to set down roots immediately, buying a foreclosed house may not suit your timeline. If you have patience, however, you may get the home of your dreams at a significant discount.

Step 1

Get pre-approved for your loan amount. When working with a bank as a seller, you must show your ability to fund the loan. Pre-approval indicates that you are creditworthy and able to take on a mortgage.

Step 2

Use a qualified professional, either a real estate attorney or real estate agent, who has practical experience working on foreclosed homes. An offer that is incorrectly written damages your ability to buy the home you've chosen.

Step 3

Research the market to understand whether and how much of a discount you can anticipate when you form the offer. Bank-owned properties don't always sell at a significant discount, depending on the market in which you're buying.

Step 4

Get an inspection to ensure you understand what you're taking on and to explain the offer amount to the bank. Foreclosed homes are sold "as-is," so termite issues, water damage, stains and roofing issues become yours to manage once the offer is approved. If the home has significant issues, get bids to repair them and subtract that cost from your offer. Include the bids with your offer to substantiate the discounted amount you're offering.

Step 5

Submit the offer to the bank. When the lender owns the home, you don't present the offer to another real estate agent, as you do in a standard home sale. Instead, you send paperwork into the bank and await a response. Depending on the bank, your adviser may need to send the offer to several departments either one at a time or in parallel. Once the bank receives the offer, you'll receive an acceptance of your offer, a counteroffer or a decline of the offer with no counteroffer. This process may take weeks or months, depending on the bank.

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