Pros and Cons of Buying Repossessed Properties

Buying a house can be incredibly exciting and terrifying at the same time, especially if it’s your first or second home. For a lot of buyers today, the idea of getting a killer deal is the ultimate goal, one that you may have heard is possible with a bank-repossessed property (also known as a “real estate owned” property or simply “REO”). Real estate prices are only going up, after all, so what’s the scoop on these REOs?

Can You Get a Deal on Repossessed Properties?

It’s a tricky question with a lot of caveats. In some markets, it will almost certainly be easier to take advantage of REOs to find lower entry price points. Other markets may not offer a lot of financial benefit to the buyer. When market inventory is low in the property type and area you’re shopping for, prices will tend to trend higher, even for repossessed properties.

On the other hand, if you’re pretty flexible and aren’t overly concerned about neighborhoods, an area with a lot more inventory can be a difficult place for a seller, creating a super local buyer’s market. Even banks are sensitive to these pressures, and since they can be more flexible about their pricing, may discount REOs more sharply in order to unload them.

What Should You Know Before Making an Offer on Repos?

If you manage to find a steeply discounted property that you’re interested in, there’s still a lot to consider before making an offer. The caveats with repos are many, but they can still work for buyers who go into the transaction with their eyes wide open.

Be aware that:

Should I Buy a Repossessed Home?

If you’ve thoroughly prepared yourself for owning a home with a poorly documented history and a higher than normal risk of unexpected problems, as well as the stressful buying process that can go with it all, then absolutely buy the REO if it’s right for you. Sometimes REOs are the only way to get into the right neighborhoods or even find a home in your budget, so there are definitely reasons to pull that trigger.

Once you’ve closed, though, you’ll probably need a lot of expert help. Don’t forget to lean into your HomeKeepr community. Not only can you access all the best home pros in your area, they’re right at your fingertips, day or night. It’s the perfect place to be if you want to buy a project home!