Buying bank owned properties
There is a lot of interest in buying bank owned properties these days. A lot of information, some good and some bad, is floating around about the subject.  The perception of most buyers is that foreclosures are the cheapest way to home ownership. It generally true that the purchase cost can be below a current market value. The reason for a lower price is usually because the property is in need of repairs costing a similar amount. The truth is banks are not know for being benevolent or foolish. Just take a look at the biggest buildings in town and you'll likely see a banks name on it. Be prepared to invest some sweat equity and often some cold hard cash to bring the property up to it's market value. If you're careful, handy and a bit lucky you can enjoy an excellent return for your investment. 

What about buying at a foreclosure auction?
Buying a property during a foreclosure sale you must pay the auction price which is normally equal to an existing loan balance plus any interest and possibly other fees accumulated during the foreclosure process, delinquent taxes, homeowners association fees, back CDD fees and possibly outstanding mechanics liens. You must also be prepared to pay with cash in hand. 

A REO, "Real Estate Owned" property is a property that did not sell during a foreclosure auction.  The bank now owns it.  The bank will usually see to the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.  Do be aware that REO’s may be exempt from normal disclosure requirements. 

Is it a bargain?
It’s commonly assumed that any REO must be a bargain and an opportunity for easy money.  This simply isn't’t true.  You have to be very careful about buying a REO if your intent is to make money off of it.  While it’s true that the bank is typically anxious to sell it quickly, they are also strongly motivated to get as much as they can for it.  When considering the value of a REO, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale.  The bargains with money making potential exist, and many people do very well buying foreclosures.  But there are also many REO’s that are not good buys and not likely to turn a profit. 

Ready to make an offer?
Most banks have a REO department that you’ll work with in buying a REO property from them.  Typically the banks REO department will use a listing agent to get their REO properties listed on the local MLS.  Before making your offer, you’ll want to find out as much as you can about the property. You can contact the listing agent or REO department at the bank but don't expect to get much information from them. They are not in the habit of exposing themselves to future lawsuits. They do little more than process the offers that come in.  Securing the services of an experienced real estate professional can usually save you money as well as equip you with the best information possible to make decisions by. Since banks almost always sell REO properties “as is”, you’ll want to be sure you aren't taken advantage of. Your agent will assist you by placing protection clauses designed to help you avoid problems. You agent will see to it that you are ready with the proper documentation of your ability to pay, such as a pre-approval letter from a lender.  After you’ve made your offer, you can expect the bank to make a counter offer.  Then it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer.  Realize, you’ll be dealing with a process that probably involves multiple people at the bank, and they don’t work evenings or weekends.  It’s not unusual for the process of offers and counter offers to take days or even weeks.