In Part 1 some key areas were covered, including:

The process of purchasing a foreclosure or a bank owned home is very different than a typical real estate transaction.

Be pre-approved and the papers to prove it.

Be On Time.  Make sure your lender knows your deadlines.  Be ready with your inspections.

Don't Be Shady.  Keep it simple.  Don't expect to have your "contingent upon the sale of your home" offer accepted.  It happens VERY rarely.

Don't Try to Renegotiate.  Do what you said you would do.  Don't cause the closing to be extended.  This could cost you money.

If you plan on buying a bank owned home and placing title in the name of your corporation or LLC, be sure to have the entity established BEFORE you make the offer.  Have the supporting documents readily available.  They will need to be submitted.

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Sellers response time can vary.  Sometimes it can be as quick as 24 hours but 3 days is common.  5 days isn't unusual.  How much time you and your buyers agent indicate on the MLS buy/sell agreement is irrelevant to the lender/seller.  They will respond when they can.  If your offer stipulates they are to accept no later than Wednesday and they don't accept until Friday, and you choose not to move forward with the transaction, that will be your choice.  You will not be penalized.  Just don't expect them to stick to the timeframe that you have indicated in your offer documents.  Remember, the listing agent has no control over the response time of the lender/seller.  As was pointed out in Part 1 of Making an Offer on a Bank Owned Home, the listing agent is simply a pipeline of information to the lender/seller.

You can cancel the offer if you find something you don't like in the home inspection without penalty assuming you have done so within the time allotted.

Inspections are your responsibility.  That includes the home inspection, pest, radon, septic and well, if applicable.  Remember, bank owned homes are sold AS-IS.   Don't ask for repairs unless you are ready & willing to walk away from the transaction.  At that point, you have nothing to lose and everything to gain, so we'll go for it.

You can not assign the contract.  Once you have an offer accepted, the lender/seller will not allow you to assign your rights to someone else.  Howerver, you may be able to purchase the property in the name of your LLC and then sell your LLC to someone else

Once your offer is accepted, you will cause yourself grief if you attempt to change lenders or loan programs.  Remember, you submitted an offer to an institution.  They have literally hundreds of properties in front of them.  If you make changes you interrupt the flow of the transaction and create the potential for delays, additional costs or penalties.  If you MUST change something to which you've agreed, do so as early in the transaction as possible. 

You won't get a sellers disclosure form from the lender/seller.  You will get a lead based paint disclosure, but lender/sellers are exempt from having to provide to you a sellers disclosure.  Very often they have no information about the property to disclose anyway.  Count on your inspections to provide the information regarding condition of the property.

Buying bank owned homes in SW Michigan, particularily Portage and Kalamazoo can be a very profitable venture.  We see many bank owned homes that are candidates for flipping.  We see many others that are strong candidates for re-hab and then long term rentals.  We refer to them as Flips or Buy & Holds.  The most common bank owned home bargain we see though is for the homeowner.  There may not be enough upside profit potential in the property to make it a Flip candidate but it may be a very attractive bank owned home that is priced 10-15% below market value.  What a perfect opportunity for a first time homebuyer! 

We see bank owned homes in all areas around SW Michigan with the majority of them in Kalamazoo. We see them in all price ranges, condition and size.  We see some income property as well.

If you are considering investing in real estate, bank owned homes are very likely the very best opportunity available.  Visit the Kalamazoo, MI area's best site for real estate information. 

My name is Joel Nelson, my contact information is available at my website.