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Buying bank owned homes, also known as REO’s, can be a great way to generate major wealth. More than one real estate investor has changed their life by investing in bank owned homes. As a result, there is a common perception that bank owned homes are a great deal.

This perception is sometimes taken advantage of by bankers and lenders. But it is seldom fully accurate. It is unrealistic to expect a lender to happily take a loss on a property. They will do everything possible to recoup on a failed investment property.

Many lenders and banks – and their real estate agents – will label their properties boldly “bank owned homes.” They are hoping that this will make buyers jump at the chance to buy the properties. And it often works. However, properties that are owned by lenders can still be sold at market value or with extra fees. Just because a home is bank owned does not mean it is a deal.

Even buying properties at auction does not mean you are getting a deal. There are often multiple additional fees that you have to pay in addition to your bid. You might have to deal with accrued interest, attorney’s fees and fees due to the foreclosure. You might not even break even by the time you pay all this.

The best way to get good deals on bank owned homes is to do your homework. You should watch out for properties that did not sell at auction. Also, check for property that has been on the market for a long time. These properties may be draining the lenders’ resources. You will have better luck negotiating a deal on this type of property than one that still appears to represent potential profit to the lender.

With REO investing, you would have the ability to make a mint if you do it right. Do not hurry or act impulsively. Make sure that any bank owned home is actually a good investment for you.