bank owned homes, also called REOs, can be a good way to generate wealth. More than one real estate investor has changed their life by investing in bank owned homes. The result – bank owned homes are commonly perceived as being a good deal.

In some cases bankers and lenders take advantage of this perception. But often it is not actually accurate. Just because a lender is stuck with a property does not mean that they will happily take the loss. They will do everything possible to recoup their failed investment.

It is not atypical to see banks and lenders label their properties clearly “bank owned properties.” This is because they are hoping that buyers will jump at the chance to buy the properties. Frequently it works. However, banks can sell at market value or incorporate extra fees if they like. A home that is bank owned is not necessarily a deal.

Even if you buy these properties at an auction, you may not be getting a deal. There are often additional fees added on to just what is owed on the property. You could also have to pay accrued interest, attorney’s fees and foreclosure fees. By the time you pay all this you might not have a deal at all.

You need to have done your homework to get a good deal on a bank owned home. Keep an eye on properties that did not sell at auction. Properties that have been on the market for a long time are a good bet. 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.

If you know what you are doing with REO investing, there is potential to make a mint. But be careful not to act impulsively. Evaluate carefully to be sure that a bank owned home is really a solid investment.