In the Treasure Valley area we have many distressed properties available for sale. Bank owned properties represent an opportunity to purchase a home at a great price, but what are the risks? What are the pros and cons of purchasing a bank owned property?

I think the biggest pros are:
1. Getting a home at a great price.
2. The bank can usually close in 30 to 60 days (or sooner in some cases).

The biggest cons are:
1. You often have homes that have not been maintained so you have to repair things (cost $$).
2. The bank has never lived there so there is no disclosure on the history of the home (are there big items that need repair?).
3. You have to follow the bank’s rules on contracts, verbiage, and addendum’s.

How do you combat the cons? DUE DILIGENCE! If you are considering purchasing a bank owned home, you will need to be very thorough in conducting inspections and due diligence on the home, the area, and the neighborhood:
1. Get an inspection. Hire a reputable inspector to do a complete inspection. If that person doesn’t inspect certain items like roofs, well, septic – hire another inspector to complete those. If questions arise with the inspection, hire professionals to give you bids on what repairs need to be made and the cost of the repairs. This must all take place within your inspection time period on the contract.
2. View public documents on the neighborhood. Is the neighborhood healthy? Talk to the homeowner association. If there is an addition you want to make sure is legal, investigate the city’s building permit process.
3. Knock on neighbor’s doors or visit with them if they are outside. If you have submitted a contract and you want to know about the neighborhood, HOA and things the previous owner may have complained about; neighbors are a great source.
4. Know what the fair market value is on the home and know what kind of money you will be putting back into the property to bring it up to your standards. Does it still make sense to purchase the home?

If you conduct your due diligence, following the bank rules on contracts and addendums is not as painful and you can feel good about your transaction.