Buying bank owned properties
There is a lot of interest in buying bank owned properties these days. A lot of information, some good and some bad, is floating around about the subject. Often the information offered is for sale, with the promise that you can make a lot of money with little effort once you know “the secret formula”. The fact is that there are no secrets, and to make money does require effort and expertise. We provide that expertise, free of charge, to our committed clients.

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 for easy money. This simply isn’t true. You have to be very careful about buying a REO if your intent is to make money off of it. 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 and they have evaluated comparable sales in the area. The bargains with money making potential exist, and many buyers are vying for these properties currently. As a Realtor that has been trained and experienced in representing REO buyers, I am able to assist my clients in evaluating the properties and presenting the most competitive offers. I know what it takes to get those offers considered.

Ready to make an offer?
Most banks have a REO department that will use a listing agent to get their REO properties listed on the local MLS. 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. In this local market, it is common for banks to receive multiple offers on the property. You need a Realtor who is well versed in the process of buying REO properties and can guide you through the pitfalls so that you get the property you want at a great price.

 
Portions Copyright © 2009 a la mode, inc.
Another XSite by a la mode, inc. | Admin Login| Terms of Use| Site Map