Real Estate Owned properties have already gone through the foreclosure process and are now owned by the bank. The Bank is the seller. Banks are not in the business of owning real estate. The bank has already gone through many expenses during the foreclosure process and now more expenses will follow. The bank wants to sell the property as quickly as possible. If your thinking about buying a REO property, this may be an affordable option for you, but the process of buying bank-owned properties are different than that of a traditional purchase.
Make sure to hire an experienced Realtor whose niche is REO properties. With the right information, and a good source for property listings, it will be easier to find an opportunity that could be just the right home.
What should I Know About Buying a REO Home?
- Know your market. You may be able to find a “deal” when buying an REO home, but it’s more important than ever that your offer price is comparable with other homes in the neighborhood. Most banks and institutions can and will negotiate; however, the goal is to sell the home at or near current fair market value.
- Budget appropriately. Most REO homes are sold “as is,” so you’ll need to consider the costs for renovation and/or repair and the time required to complete them. Most banks and institutions make necessary repairs and properly maintain the home after the foreclosure, but you may want to make some as well.
- Inspect the home. Be sure to have the home inspected. This is an important step for any real estate transaction, but even more so for REO homes since they may have been vacant for a period of time and the bank makes no guarantees as to the properties condition.
- Be ready. As with any real estate transaction, if you are a serious buyer and approved for financing, you need to be able to act quickly. If you see a home that you’d like to buy, the sooner you can make the offer the better. Many investors are interested in REO homes and they are often able to move fast.
What is the Buying Process for REO Homes?
The buying process for REO homes is not much different than any other home. There are typically additional addendums and disclosures for REO properties.
- Get approved, or at least Pre-approved. This is a critical step in any real estate transaction to help you determine how much home you can afford and show sellers that you’re a serious buyer.
- Hire a Licensed Real Estate Professional and begin house hunting! You should consider a qualified real estate professional who has a proven track record with REO transactions.
- Make an offer. Your Real Estate Professional can assist you in determining a purchase price.