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| If you need more information or would like additional REO help, please fill out the form below & we'll gladly get in touch with you. |
Buying Bank-Owned Properties.
With so much recent interest on bank-owned properties (REOs), the team at CENTURY 21 Adams &
Barnes thought we take a moment to give some background and education on the opportunities and
points-to-ponder with this growing sector in real estate.
What’s an REO?
REO stands for “Real Estate Owned”. These are properties that have gone through foreclosure and
are now owned by the bank or mortgage company. This is not the same as a property up for
foreclosure auction. When buying a property during a foreclosure sale, you must pay at least the loan
balance plus any interest and other fees accumulated during the foreclosure process. You must also
be prepared to pay with cash in hand. And on top of all that, you’ll receive the property 100% “as is”.
That could 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 property did not find a buyer during
foreclosure auction. The bank now owns it. 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. Do 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.
Is It A Bargain?
It’s commonly assumed that any REO must be a bargain and an opportunity to buy a home "cheaply" or
to make some "easy money". This simply isn't’t true. You have to be very careful about buying an REO
and ensure that you have a qualified and well-trained REALTOR who can guide your through the
process. While it’s true that the bank is typically anxious to sell it quickly, they are also strongly
motivated to get as much as they can for it. When considering the value of a REO, your REALTOR and
you must look closely at comparable sales in the neighborhood and be sure to take into account the
time and cost of any repairs or remodeling needed to prepare the house for resale. The opportunity to
purchase a great home at a great price is out there. Our REALTORS are trained to see these
opportunities and guide you through all the appropriate steps.
Ready To Make An Offer?
Most banks have a REO department that your REALTOR and you will work with in buying a REO
property from them. Typically the REO department will use a listing agent to get their REO properties
listed on the local MLS. Before making the offer, your CENTURY 21 Adams & Barnes REALTOR will
want to contact either the listing agent or REO department at the bank and find out as much as you can
about what they know about the condition of the property and what their process is for receiving offers.
Since banks almost always sell REO properties “as is”, you’ll want to be sure and include an
inspection contingency in your offer that gives you time to check for hidden damage and terminate the
offer if you find it. As with making any offer on real estate, you’ll make your offer more attractive if you
can include documentation of your ability to pay, such as a pre-approval letter from a lender. After you’
ve made your offer, you can expect the bank to make a counter offer. Then it will be up to you to decide
whether to accept their counter, or offer a counter to the counter offer. Realize, you’ll be dealing with a
process that probably involves multiple people at the bank, and they don’t work evenings or weekends.
It’s not unusual for the process of offers and counter offers to take days or even weeks. Therefore, our
REALTORS are training to communicate with you every step of the way so that you know what's
happening, when its happening.
With so much recent interest on bank-owned properties (REOs), the team at CENTURY 21 Adams &
Barnes thought we take a moment to give some background and education on the opportunities and
points-to-ponder with this growing sector in real estate.
What’s an REO?
REO stands for “Real Estate Owned”. These are properties that have gone through foreclosure and
are now owned by the bank or mortgage company. This is not the same as a property up for
foreclosure auction. When buying a property during a foreclosure sale, you must pay at least the loan
balance plus any interest and other fees accumulated during the foreclosure process. You must also
be prepared to pay with cash in hand. And on top of all that, you’ll receive the property 100% “as is”.
That could 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 property did not find a buyer during
foreclosure auction. The bank now owns it. 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. Do 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.
Is It A Bargain?
It’s commonly assumed that any REO must be a bargain and an opportunity to buy a home "cheaply" or
to make some "easy money". This simply isn't’t true. You have to be very careful about buying an REO
and ensure that you have a qualified and well-trained REALTOR who can guide your through the
process. While it’s true that the bank is typically anxious to sell it quickly, they are also strongly
motivated to get as much as they can for it. When considering the value of a REO, your REALTOR and
you must look closely at comparable sales in the neighborhood and be sure to take into account the
time and cost of any repairs or remodeling needed to prepare the house for resale. The opportunity to
purchase a great home at a great price is out there. Our REALTORS are trained to see these
opportunities and guide you through all the appropriate steps.
Ready To Make An Offer?
Most banks have a REO department that your REALTOR and you will work with in buying a REO
property from them. Typically the REO department will use a listing agent to get their REO properties
listed on the local MLS. Before making the offer, your CENTURY 21 Adams & Barnes REALTOR will
want to contact either the listing agent or REO department at the bank and find out as much as you can
about what they know about the condition of the property and what their process is for receiving offers.
Since banks almost always sell REO properties “as is”, you’ll want to be sure and include an
inspection contingency in your offer that gives you time to check for hidden damage and terminate the
offer if you find it. As with making any offer on real estate, you’ll make your offer more attractive if you
can include documentation of your ability to pay, such as a pre-approval letter from a lender. After you’
ve made your offer, you can expect the bank to make a counter offer. Then it will be up to you to decide
whether to accept their counter, or offer a counter to the counter offer. Realize, you’ll be dealing with a
process that probably involves multiple people at the bank, and they don’t work evenings or weekends.
It’s not unusual for the process of offers and counter offers to take days or even weeks. Therefore, our
REALTORS are training to communicate with you every step of the way so that you know what's
happening, when its happening.
