Buying bank owned homes, or REO’s, can be a source of serious wealth generation. There are definitely many real estate investors who have changed their lives this way. The result – bank owned homes are commonly perceived as being a good deal.

In some cases bankers and lenders take advantage of this perception. Often, however, it is inaccurate. A lender will not happily take a loss just because they are stuck with a property. They will do everything possible to recoup their failed investment.

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. Often it works. However, banks can sell at market value or incorporate extra fees if they like. Just seeing that a home is bank owned does not make it 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 could also have to pay accrued interest, attorney’s fees and foreclosure fees. By the time you are done you may not have a deal at all.

You need to have done your homework to get a good deal on a bank owned home. You should target properties that did not sell at auction. Look for properties that have been on the market a long time. These properties are likely to be draining lender resources. You will have better luck with these properties than those that might still turn a profit.

With REO investing, you have the potential to make a mint if you know what you are doing. Do not hurry or act impulsively. Evaluate carefully to be sure that a bank owned home is really a solid investment.