Buying a property from the FDIC

3 Replies

Does anyone have experience in buying a property that was owned by the FDIC? And if so, how'd that go? And any advice? I'm looking at a 6900 sf mixed use property that needs a lot of work. They acquired the property from a bank that went belly-up. So, would they be eager to get rid of it? Do they have to pay taxes on it even though they are the fed (FDIC). Thanks in advance.

@Jack Clough

Yes, they are generally eager to get rid of their property. FDIC acquires their properties through bank failures. During the Other Real Estate Owned (OREO) holding period, they are required to deal with maintenance, property taxes, insurance, and misc. costs.

They will hold auctions for the properties. But some are listed with local agents.

The information is usually sketchy. So, you often need to put in a call to the listing agent to get more information. Because the properties are from bank failures, they aren't that widely available across the country. Today, there aren't any in NY near me.

To buy something, you do have to fill out their certification form. It's nothing complicated.

If you buy at one of their auctions, they will stage the homes 1 to 2 days before. Back taxes and back HOA dues can be attached to the home. Everything is "as-is," so there can all kinds of issues. They can come occupied.

Local authorities can not attach involuntary liens to homes in receivership with the FDIC. However, if a lien was already attached before going into receivership it can still be attached. FDIC is exempt from a lot of things like sales taxes and penalties, but not from normal taxes on real property.

In theory, the homes are ones that the failed bank already had foreclosed on. FDIC will sell off performing loans to other banks. So, the properties they are selling are ones that are bank owned at the time of failure and are free of mortgages. But, like I mentioned earlier, some things can still be attached so you have to do some due diligence...

Updated over 4 years ago

On a related note, from my FDIC contact: there are a few instances that there is an unreleased mortgage or lien, but they try to disclose that where possible. Also, properties are either sold on quit claim deed contract or Receiver's Deed, both of which have little to no warranties. So, they highly recommend that any purchaser do their homework and, when possible, obtain title insurance...

Thanks Chris - that all aligns with what I've learned so far. There was a company that went bankrupt so the bank foreclosed, then the bank went belly up so the FDIC swooped in. It's a commercial property and it's been listed for quite a while now by a commercial agent. The agent told me that part of it was renovated and won't require much work but the other half had a small fire and some water damage from the sprinklers so I'm guessing it's a gut job on that side (two 3-story row homes next to each other but sharing the bottom floor retail space). I'll know more when I see it next week. So, considering all that, do you think they'd be even more eager to dispose of it? Thanks again.

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I'm going to try to resurrect a dead thread here.. sorry. Jack, did you happen to purchase that property listed by the FDIC? What was your experience? Did you have any drawbacks to certifying or funding the project?