Ask the Expert: Buying bank-owned house

Q: I want to buy a bank-owned house but it needs major work. Do I really have to buy it as-is?

Typically, when you purchase a bank-owned home and the listing says “as-is,” the bank means it. From their perspective, you’re getting a great deal and should expect to have to spruce the place up or make repairs.

But what if the septic system has failed or you find some other major issue?

Rule of thumb: you can ask, but don’t expect much.

If you discover an issue that the bank was previously unaware of, you’ve got a better chance of them either fixing it or giving you a price reduction. In those cases, the bank understands that it’ll have to disclose the issue to other potential buyers and that the bids will likely come in lower as a result.

If everything was disclosed prior to you seeing the property and you simply want to haggle, know that you may be gambling a bit. The bank’s willingness to negotiate will depend on how long the property has been on the market and its location. You won’t find much give for desirable locations that haven’t been listed long.

The good news is that you can truly find some deals. And if you are the owner occupant, meaning that you intend to live in the property, you often get first dibs. Banks often offer properties to owners first and make investors wait about 15 days before they can jump into the bidding.

So don’t be afraid of as-is properties. Consult with your Realtor and contractor to determine the type of work it might need, and if you factor the cost into your purchase price — you might even be able to finance certain repairs in your mortgage — you can find a gem.