BUYING A REO

Real Estate Owned or REO is a class of property owned by a lender, typically a bank, after a default sale at a foreclosure auction. After an unsuccessful auction, the bank will go through the process of trying to sell the property on its own. It will remove some of the liens and other expenses on the property and try to resell it to the public. (wikipedia.org) 

There is a lot of interest in buying bank owned properties these days. As foreclosure numbers increase, the bank owned inventory increases. However, competition on these properties is high and transaction requires specialists.

 

 “Real Estate Owned” or “Bank-owned” properties have gone through foreclosure and are now owned by the bank or mortgage company. 

 

 

NO. REO sale is not the same as a property up for foreclosure auction. When buying a property during a foreclosure sale, you need to be ready with cash in hand to pay at least the loan balance plus any interest and other fees accumulated during the foreclosure process. In exchange, you will receive the property “as is” which might include existing liens and even current occupants that need to be evicted.

 

A REO, by contrast, is a much “cleaner” and attractive transaction. The REO is owned by the bank because it did not find a buyer during foreclosure auction. The bank will see to the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing. 

 

Be aware that REO’s may be exempt from normal disclosure requirements. In California, for example, banks are exempt from giving a Transfer Disclosure Statement, a document that normally requires sellers to tell you about any defects they are aware of.

 

 

It depends. While it’s true that the bank is typically anxious to sell the property quickly, they are also strongly motivated to get the highest price for it. When considering the value of a REO, look closely at comparable sales in the neighborhood and calculate carefully the time and cost of any repairs or remodeling needed to prepare the house for a move or resale. The bargains with money making potential definitely exist, and many people do very well buying foreclosures. Panorex Realty specializes in finding these deals for you.

 

 

Typically the REO department will use a listing agent to get their REO properties listed on the local MLS. Before making your offer, Panorex Realty will contact either the listing agent or REO department at the bank and find out as much as possible about the condition of the property and how offers are received. Panorex Realty will also work with you in preparing an attractive offer which will also include documentation of your ability to pay, such as a pre-approval letter from a lender. Through our affiliates, we can make the process easier for you.

 

The bank may make a counter offer. Panorex Realty will work with you to decide whether to accept their counter, or offer a counter to the counter offer. We will negotiate the best deal for you and will deal with a process that probably involves multiple people at the bank.