Over the last few weeks, I've gotten a number of questions about buying New Hampshire bank-owned real estate because they have such great prices on them. Potential buyers here in the Portsmouth area are drawn to the attractive prices of those properties, without realizing the probably issues with those types of properties.
Foreclosures, which are the same as bank-owned real estate, are also listed in the Multiple Listing Service (MLS) as well. Banks most often use agents to sell their properties, and those will also show up on the sites and the various MLS sites. Here in New Hampshire and Maine, all of the properties for sale around the state will be listed in that system for all of us to have access to.
There are usually inherent problems with bank-owned properties that many times potential buyers don't think about until they actually go view bank-owned real estate.
The people who had owned that now bank-owned house fell seriously behind in their mortgage payments because they didn't, for whatever reasons, have the money to make those payments. Typically that also means they didn't have the money to take care of the house either, which means that needed repairs and/or improvements were not done as well as no payments being made.
When a bank takes a house away from someone, they're taking that person's or that family's home, and emotions are running very high in those situations. Many times, we see that the homeowner, during the time they were being forced to move out, take their anger out on the house. We see holes that have been punched and/or kicked in the walls, doors ripped off their hinges, water heaters taken, sinks pulled off the walls in bathrooms, busted windows, etc. People are very angry when their lose their homes, and they oftentimes leave those kinds of messes behind, thinking the bank will have to deal with it. 
The way the bank deals with it is to sell it in 'as is' condition, meaning the new buyer takes on all those problems. Some of those problems come in the way of plumbing issues because there's been no heat in the house, and the pipes leak and/or burst. That causes multiple problems when that happens, and those are problems the new buyer has to take on at their expense.
Most of these homes sit vacant for some time before they even come on the market, and because they're empty, typically there's no heat or electricity on in them. And because of that, many times a property ends up with additional damage, and just plain deterioration. Vacant homes deteriorate faster than a home that people are living in - there's no one there to live in it and love it.
Having written all this, that's not to say that all bank-owned properties are like that, but the vast majority of them do come with their own sets of problems that potential buyers have to know may exist before they even go look at these types of properties. And if you do come upon any in the price range you're looking in, I'd certainly say they're worth looking at, as long as you know in advance what you may be in store for.
Banks are not usually aware of all the problems with a property they've got for sale, and the listing agents are not usually aware of all of them either. You do have the right to have any kind of inspections done that you choose, but the property is being sold in 'as is' condition, regardless of what comes out of the inspection. They may negotiate further on the price after the inspection, but they won't do any work needed to correct any deficiencies uncovered in the inspections. 
So, while at face value bank-owned properties can certainly seem like a good deal, there's usually far more there than meets the eye. And yes, typically speaking, bank-owned properties are generally priced below the market, but now you know that there's good reason for that to be the case.
If you have the wherewithal to take on these types of projects, either because you have the skills to do the work that will likey be needed, or you have the finances to pay someone else to do that work, there may be some great opportunities in bank-owned properties for you.
If you're interested in pursuing homes, condos, real estate in Portsmouth NH and/or the surrounding areas, make sure you speak to an experienced professional REALTOR who'll work hard to help you achieve your real estate goals. Give me a call or send me an email - I'd love to talk with you!
Ann Cummings, New Hampshire - Maine REALTOR
Broker - NH and Maine
RE/MAX Coast to Coast
Portsmouth NH
ann@anncummings.com
888-349-5678 x 3839
Servicing the Coastal Areas of NH & Southern Maine 
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Let me put my years of experience here in the coastal areas of NH & southern Maine to work for YOU! Servicing the greater Portsmouth, Hampton, Exeter, Dover, NH areas & the southern tip of Maine.
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All the homes that I've shown lately are bank owned homes and I'll tell you I've seen it all. Went in one today with no disclosures and being sold as is. There was ankle deep water in the basement and it had an oil spill...all floating around. No power, no heat...marketed as a 4 bedroom home...a little research shows it to be a 2 bedroom. There are some very good buys out there but definitely buyer beware.
Ann, Buyers of these properties might even have a problem getting financing, depending on how much damage that was done to the house. The house has to be a functional house before we will do a loan, so Buyers need to be prepared for that also.
It is amazing what people will do when they are being foreclosed on. After all it is the Lenders fault that they don't make their Mortgage payments. Amazing.
Ann.... you make some great points for those buyers that are looking for a steal. Yes, they can usually get a great deal, but as you mentioned, they better have some extra cash to do the repairs, because the bank usually won't. I am actually doing mortgages on 2 REO's. One borrower bought a very sound house, it passed inspections and the termite. My other client had to pay for water treatment, a new system for the water, and $1,300 in termite damage. The overall costs just for the repairs? About $3,300. So, again, you bring up some great points for the average consumer to be aware of, prior to bidding on a house.
Ann--All very important considerations for foreclosures...They can be a deal but buyers have to go in with their eyes wide open!
Great information in this post Ann. I have had a lot of calls latelty regarding bank-owned properties also. It is very important for the buyers of these properties to get this information prior to viewing them.
Hi Monika - some of those properties give me the creeps when showing them, especially those with swimming pools like that in them. For the buyers with construction backgrounds or the money to pay someone to do the work needed in some of these properties, they can pick up some great deals. But they need to know ahead of time that finding financing for them is a real challenge, never mind the work needed.
Thanks for commenting!
Ann
George - when I go into some of these, it just makes you wonder about the anger involved to inflict the kind of damage we see. We know it's an emotional situation when someone loses their home, but to be so destructive to the home that they loved really gets to me.
You're right about financing problems for those houses. I know for some of them you can use 203K financing, and some buyers have the ability to get a construction loan.
Thanks for reading and commenting!
Ann
Jeff - $3300 is cheap for work needed to a bank-owned house, at least from what I've seen and heard about. That actually kinda seems like what comes out of an inspection on a regular sale.
Your people who found that bank-owned that passed all the inspections found themselves a nice house, it sounds like. And I'm sure they got a nice deal on it, too. The other sounds pretty good as well.
Thanks for commenting!
Ann
Teri - eyes wide open, as far as they'll go on some of those houses!
Bill - I don't think most buyers have any idea what some of those properties are like, They see and hear about the 'deals', and yet they are totally unaware of just why those houses are such 'deals' at times.
Many thanks for reading and for commenting!
Ann
There are some doozies out there! Ann, you did a great job of cautioning consumers that their "deal" may include multiple problems. I guess you could say buyer beware! But with you as their REALTOR buyers can be sure that you can lead them to many resources that will allow them to make an informed decision!!
Hey Ann,
Great points! Price brings people in but when they see how much there is to do to a bank owned property it often scares folks away. Bare in mind too that most bank owned properties don't have appliances either. List price may be low but it may not be as cheap as one thinks when you get into the place.
Kim - there certainly are! It really is, on those types of properties, 'buyer beware'. The problem is that most of them don't really understand the problems with the financing aspect, no matter how you tell it to them. And thank you for that nice compliment!
Hey Sue!! Great to see you - missed you around here! Those low prices should be telling people something. i forgot about the appliances - you're right about that. I've seen some where they also needed basics like a hot water heater, and a furnace in a couple of them. Good to see you!
Thanks for the comments!
Ann
We are having similar experiences Ann, and I read a post from Lenn Harley showing she is too. I guess the fact that the holidays are over brought people out....it's going to be challenging but useful to get all the callers and buyers I take out to learn the value of the homes and how much or how little they can expect to dicker on the prices. Here it's kind of all over the map but sometimes the callers are very unrealistic. Good analysis on your part gf!
It's a good idea to bring the idea of deferred maintenance or worse - serious damage - to the discussion of REO property. Especially since the appraisal process, or even some inspections with first-time buyer programs, can derail the mortgage process. It's good to work with a smart Realtor and a local lender with these things, so that you match the right person with the right home.
Out here, many REO are brand new homes, so there aren't as many problems with deferred maintenance. But you'd be surprised how many bitter homeowners damage their home before the foreclosure. Sad.
Hi all,
I have actually been inspecting bank owned properties quite a bit lately. Most of the time the heat and water is not on and I do see damage.
I believe they are "as is" but the potential buyer will have an inspection to see just how much neglect the property has had, and I usually see damage and neglect.
Carla
Carole - thanks! It would behoove all of us to make sure buyers who call on these types of properties understand just what is likely to be involved in them. I think a lot of them see low prices and get excited without thinking about just why that price is low.
Joey - we don't have any new homes that are bank-owned here in my area, at least not that I know of. But even if we did, the kinds of damage we're seeing would be incurred in those as well - no heat on, pipes burst because of freeze-ups, and then you have all that water damage and plumbing mess to contend with. Also probably replacing furnaces, potential electrical damage, and who knows what else. And you're right about the emotional aspect of someone losing their home - some of the damage done by the homeowners has been beyond belief.
Carla - all the bank-owned here in my areas are all being sold in 'as is' condition. Even though they're being sold in 'as is' condition, buyers are welcomed and encouraged to have their own inspections. Most of them, however have to be done while the house is winterized, so they're not able to check heating, plumbing, electrical, etc. True 'as is' condition, that's for sure.
Many thanks for reading and commenting!
Ann
Ann, Great post and so so true. I know down here in Florida I have people call me asking me about these type of properties. I tell them please remember they have been vacant and in South Florida it would be very advisable to make sure you have really good inspections.
Hi Matt - thanks for commenting! It's almost a given up here that there will have been burst pipes from our winter weather, and that means a major mess with plumbing, flooring, sheetrock, and on and on. Many times, this kind of work isn't referenced in the listing remarks, so most buyers have no clue what they might be in store for just in looking at the property.
Ann
Ann - This is an issue many potential buyers of bank owned properties overlook. These property many times have hidden problems that can cost a great deal to correct. Because the people are usually very angry about losing their home this angry is directed at the property. Excellent advice.
Hi Jennifer - it is very sad to know that people lose their homes, and that anger is a very strong emotion to cope with. I can understand how that anger can cause people to do things that they wouldn't ordinarily do. And then we have the banks that just have no clue about the importance of winterizing a home the moment they take it back - then the damage that ensues ends up costing them so much money because they just have to keep lowering the price to reflect that damage, and then of course, the buyer pool for those properties gets smaller and smaller with that kind of damage. And the financing programs become extremely limited as well.
Thanks for commenting!
Ann
The Bank owned or REPO frenzy is going on in Southern California too. Buyers love the IDEA that they are getting a bargain!
Hi Tina - everyone loves a deal! And when it comes to bank-owned property, they really need to have their eyes wide open.
Thanks for reading and commenting!
Ann