Bank owned == REO

Means that it has already went through the Foreclosure process and the bank has ownership.  It's *not* the same as a short sale which happens *prior* to the foreclosure process.

Bank owned means it isn't as much of a nightmare as a short sale when it comes to getting a responsd to an offer.  Banks are much more eager to move these properties.

As far as agents getting commissions, I have heard of banks not offering a full 3% commission to buying agents.  That shouldn't perclude you from making an offer.  Sorry, but 3% commission really isn't that big of a deal.  

If you make an offer and the bank says it is too low, you can always walk away.  I would always expect a 3% commission to be part of your analysis, and if the bank doesn't want to pay it, I would discount the offer to make up for it.  

I bet the best time to buy bank owned is in two weeks.  That way it is past the original deadline for the tax credit, but closing is in time for year end accounting.  I imagine a lot of banks want to clear off some properties before year end.

Bank owned properties have a few caviats:

1. FHA loans will not work and even conventional loans (20% down) becomes more difficult due to the condition of the house.

2. There will be work with the house.

3. Rehab loan approval will be required. This is difficult these days since most banks are moving away from offering these loans.

4. Broker's approvals are usually not accepted. Banks generally want a bank preapproval (for both the Conventional loan and Rehab loan). This makes it more difficult and slower.

I had lots of problems getting mine; but it may be worth it if you know lots of good contractors and good bank contacts.