An REO is a property that goes back to the mortgage company after an unsuccessful foreclosure auction. Currently, most foreclosure auctions do not even result in bids. On the courthouse steps, foreclosure sales begin with a minimum bid that includes the loan balance, any accrued interest, plus attorney’s fees and any costs association with the foreclosure process. If you are the successful bidder, you receive the property in “as is” condition, which may include someone still living in the property. There also may be other liens against the property.
Since what is owed to the bank is almost always more than what the property is worth, very few foreclosure auctions result in a successful sale. Then the property is repossesed by the bank and becomes an REO property.
REO Properties For Sale – The bank now owns the property and the mortgage loan no longer exists. The bank will handle the eviction, if necessary, and may do some repairs. They will negotiate with the IRS for removal of tax liens and pay off any homeowner’s association dues. As a purchaser of an REO property, the buyer will receive a title insurance policy and the opportunity to inspect the property.
A bank-owned property might not be a great bargain. Sometimes they are completely mis-priced and sit for months without activity. That’s where we can help. We have sold many REO properties. We know the “trend” of price reductions and how much a bank will typically discount their listing price.
On the other hand, an REO property might be extremely underpriced. Sometimes, this is an accident. Sometimes, it is on purpose and a three-day time period is given for “highest and best” bids. In this scenario, WE KNOW THE SECRETS TO HAVING YOUR OFFER STAND OUT FROM THE REST!
Why are REOs preferred? – Buying an REO is similar to buying a short sale except the property is already owned by the lender. The property was acquired by the lender through a foreclosure action. Often, lenders will sell repossessed homes for less than the past loan balance.
Bank-owned properties are called REOs, meaning real estate owned by the lender.
REO homes can be considered the best way to buy a distressed property because the seller is already out of the picture. There are no waiting periods like short sales. It’s just the buyer, the buyer’s agent, the bank and the bank’s agent who are negotiating the transaction. Unfortunately, not all banks are easy to work with. Remember, the seller in REO properties is a bank not a person. That is where our expertise is essential. There is no compassion or feelings, no sense of urgency either. Most likely the person working on your offer has about 300 others on his or her desk. Oh, and bank representatives only work 9am-5pm , Monday through Friday so don’t expect any response on the weekends or evenings.
If you are considering an REO purchase, let us help guide you through the process with information you must have about the laws, requirements, risks and potential rewards.