Real Estate Owned Properties(REO)
Bank Owned Properties (REO)
REO vs. Foreclosure
An REO or real estate owned property, is a property that goes back to the mortgage company after an unsuccessful foreclosure auction.
A foreclosure sale begins with a minimum bid that includes the loan balance, any accrued interest, plus any attorney's fees and costs association with the foreclosure process. If you are the winning bidder, you will receive the property in an "as is" condition.
A lot of times what is owed to the bank is almost always more than what the property is worth. Then the property becomes an REO, or "real estate owned" property.
An REO or real estate owned property, is a property that goes back to the mortgage company after an unsuccessful foreclosure auction.
A foreclosure sale begins with a minimum bid that includes the loan balance, any accrued interest, plus any attorney's fees and costs association with the foreclosure process. If you are the winning bidder, you will receive the property in an "as is" condition.
A lot of times what is owed to the bank is almost always more than what the property is worth. Then the property becomes an REO, or "real estate owned" property.
REO Properties For Sale
With an REO property, the mortgage company no longer has control over the property and the bank owns it. The bank will then handle the eviction, if necessary, and may do some repairs if there is any. They will handle all negotiate with the IRS and pay past due homeowner’s association dues.
How Banks Sell REO's
Each bank/lender completes the REO process a bit differently. They want to get the best price possible and have no interest in getting rid of the property for a low cost. In General, banks have an entire department set up to manage their REO inventory.
Once you make an offer to purchase the property, banks will generally present a "counter-offer." You should then plan to counter their counter-offer.
Making an Offer
Before making an offer, your agent should contact the the listing agent and ask the following questions:
- Is there an"as is" form?
- Are there any inspection reports?
- How long does it take the bank to accept an offer?
- What work has the bank agreed to?
- How does your agent deliver the offer?
Offers are usually FAXED to the bank. The listing agent will keep your original copy. Nothing happens evenings and weekends because the banks are closed. Since there is no face-to-face presentation to the bank, you should provide the listing agent with a pre-quall letter or a pre-approval letter and a bio. Remember that REO's sell at pretty close to full market value.
