What to Learn Regarding Real Estate-Owned Properties

A real estate-owned (REO) house, also known as a bank-owned home, is usually one that did not successfully make it through the foreclosure auction procedure. As a matter of fact, rather than auctioning the home after foreclosure to discharge the original mortgage loan, the lender, which is usually a financial institution such as a bank, takes over possession of the home and endeavors to sell the property itself.

Because foreclosed properties usually cost more than their value (particularly when you tally up all the expenses linked to foreclosures aside from the actual price), not every foreclosure auction results in success. When this happens, the bank will receive ownership of the home and the home turns into real estate-owned. Essentially, the bank is now the homeowner.

This also signifies the mortgage loan no longer effects the value, and the bank assumes the task of evicting anyone who may still live in the home (both of which would be circumstances the winning bidder at the auction would have to handle). The bank may even make repairs to the home.

Tips for Buying Real Estate-Owned Property

Each Lender handles real estate-owned sales uniquely. One bank may try to sell an REO property at an auction, while another may employ the services of a real estate agent. It is good to become acquainted with how the particular bank you are dealing with manages selling REO homes. Or, if you are exclusively in the market for an REO property, search for a financial institution selling one using a method with which you are comfortable.

Meanwhile, reflect on these tips for buying an REO property:

Do not suppose you will get something for nothing. Although the bank hopes to sell the home, it is most likely not willing to give it away. A bank will want the home's full market value, or pretty close to it, and the bank may even present counter-offers after you submit your initial offer. Of course, do not forget to consider the condition of the property when you put in an offer or a counter-offer.

Ask about financing. Banks do not regularly offer financing for homes they own, but you can nevertheless ask. If the bank does not offer financing, make certain you are prepared with another plan, as the bank may require it.

Carefully read the fine print. Although the bank could put in a few home repairs, it will probably want to sell the property "as-is". Nonetheless, this does not mean you can not negotiate certain other repairs or guarantees. Include such conditions in your offer and begin a negotiation process.

Request a property viewing. Even though the bank has made repairs, or even agrees to make further repairs, you can always ask to have a home inspector examine the place. You may also want to request any inspection reports for the home the bank has on file.

Get some help. Whether a realtor or a lawyer, find a specialist who is skilled in dealing with real estate-owned sales. Not only will they make sure you are getting the best deal possible given the property and price, this person can aid you in presenting your offer, collect other necessary documents, and potentially even negotiate the price.