Can I negotiate the price on a bank REO, or is the list price fixed?

You can negotiate, but the range is narrower than with a private seller. Banks typically accept offers 5–15% below list price on properties that have been sitting for more than 30 days. If a property was listed yesterday, you're unlikely to get more than 3–5% off without a competing offer leverage scenario or documented repair evidence.

Do banks accept contingent offers on REO properties — for example, contingent on selling another property?

Almost never. Banks treat contingent offers as non-offers. They want clean contracts with proof of funds or pre-approval, a reasonable earnest money deposit (typically 1–2% of purchase price), and a buyer who can close on their timeline. Submitting a sale contingency will usually get your offer deprioritized or rejected outright.

What's the difference between buying a HUD home and buying a bank REO?

HUD homes are properties the federal government acquired after FHA-insured loans went to foreclosure. They're sold through a specific bidding platform at hudhomestore.gov with structured bid periods — owner-occupants get first priority, then investors. Standard bank REOs are sold by private lenders through MLS listing agents with no bid-period structure.

Is earnest money refundable if I cancel during the inspection period on a bank REO?

Only if your contract explicitly preserves that right. Banks' standard addenda often limit or eliminate the inspection contingency, meaning a cancellation after acceptance could cost you your earnest deposit. Always negotiate a clear inspection contingency with a specific cancellation deadline — in writing — before signing the bank's addendum.

How long does it typically take to close on a bank REO?

Expect 30–45 days minimum from accepted offer to closing. Banks with large REO portfolios route every decision through asset management departments and outside legal counsel, which creates delays. Cash transactions close faster — sometimes in 21 days — but financing deals routinely push past 45 days if the bank's title work or internal approvals lag.

How to Buy Bank REO Properties

Buying bank REO properties means purchasing homes the bank already took back through foreclosure and now owns outright on its balance sheet. These are not auction properties — the bank holds title, sets the price, and negotiates directly with buyers, usually through a listing agent. The process looks like a normal real estate transaction on the surface, but several mechanics work differently, and those differences determine whether you get a deal or waste three months of your time.

What REO Actually Means

REO stands for Real Estate Owned. When a foreclosed homeowner fails to redeem the property and no one bids high enough at the courthouse auction to cover the bank's debt, the lender takes title. The bank then becomes the seller. It hires an asset management company or a local real estate agent — sometimes called a listing broker or REO agent — to market and sell the property. You won't negotiate with a loan officer. You'll deal with that agent, who submits your offer to an asset manager, who works under internal approval guidelines the bank has set.

Small community banks might carry 5–10 REO properties at a time. Large servicers like Fannie Mae and Freddie Mac operate dedicated REO portals — HomePath.com and HomeSteps.com respectively — with hundreds of active listings.

Where to Find REO Listings

The MLS is the most practical starting point. REO properties appear there like any other listing, usually with language like "bank-owned," "sold as-is," or "no seller disclosures." Filter for those terms in your MLS search.

Beyond the MLS, go directly to the source. Fannie Mae's HomePath and Freddie Mac's HomeSteps publish their own inventory. For FHA-insured properties that went to foreclosure, check HUD Home Store at hudhomestore.gov. Most major banks — Wells Fargo, Bank of America, U.S. Bank — maintain REO sections on their own websites. These pages are sometimes buried, but they exist.

Third-party aggregators like Hubzu and Auction.com also list bank-owned properties, though some of those run through an online bidding process rather than a traditional offer system. Know which format you're dealing with before you invest time.

How the Offer Process Works

Once you identify a property, you submit an offer through the listing agent using a standard purchase contract in your state. The difference from a normal transaction: the bank will counter, delay, or ignore offers on its own timeline. Expect 5–15 business days for an initial response. Some asset managers respond in 48 hours; others go silent for two weeks.

Banks typically want proof of funds or a mortgage pre-approval letter with your offer. Cash buyers move faster and get preference when offers are competitive. On lower-priced properties — say, a $65,000 single-family in a Midwest market — cash is almost a requirement because conventional lenders won't underwrite loans below $50,000–$75,000.

Banks use their own addenda on top of your state contract. Read every page. These addenda almost always shift repair liability entirely to you, shorten your inspection period to 10 days or less, and include clauses that let the bank cancel without penalty if their internal title work reveals problems.

Warning: Banks frequently use their own "as-is" addenda to void standard buyer remedies — including the right to cancel for inspection findings — unless you specifically negotiate that contingency back in writing during the counter process. Many investors miss this and lose their earnest money when they discover the roof needs $18,000 in work.

Running Your Numbers on an REO

The bank's list price is not the deal. Banks hire BPO agents (Broker Price Opinion) to set asking prices, and those agents often base their numbers on retail comps without accurately discounting for deferred maintenance. A property listed at $120,000 that needs $40,000 in work is priced at $80,000 of real value — but only if your comparable sales after repair support a $150,000+ ARV.

Use the 70% rule as a rough filter: don't pay more than 70% of ARV minus rehab costs. On that same property: $150,000 ARV × 70% = $105,000 minus $40,000 rehab = $65,000 maximum offer. If the bank wants $120,000, walk. Banks do negotiate, but they rarely drop more than 10–15% from list price on properties priced within market range.

Factor in holding costs from day one. REO closings routinely take 30–45 days, sometimes 60. Add property taxes, insurance, utilities, and carrying costs for your rehab timeline on top of that.

The Inspection and Due Diligence Window

You almost always get an inspection period — typically 10 days, occasionally up to 15. Use all of it. Hire a licensed inspector, and if the property is older than 1978, add a lead paint inspection. For any property with a crawl space or basement, add a separate mold and moisture assessment.

Banks won't fix anything. The rare exception is an FHA-required repair on a HUD home where the buyer is using FHA financing. Outside that scenario, assume the price you negotiate is the price you pay, and every repair comes out of your pocket. If the inspector finds a cracked foundation, you need a structural engineer's report and a repair bid before you can make an informed decision to proceed or cancel.

Title insurance is non-negotiable on REO. Banks typically clear title before sale, but tax liens, HOA liens, and mechanic's liens occasionally survive foreclosure depending on the state. Review your state's lien priority rules before closing so you know exactly what the title company is insuring against.

Closing and What Happens After

The bank picks the closing attorney or title company in most cases. You can often request your own title insurance, but the bank controls the closing agent. Review the HUD-1 or ALTA settlement statement carefully — banks have been known to charge buyers for unpaid HOA dues or delinquent utilities as closing adjustments.

Once you close, you own the property free of the previous owner's mortgage. There's no right of redemption on a completed REO purchase — that risk existed at the auction stage, not here. You get the deed, you start your rehab, you move on.