REO Search
Purchasing a Bank REO Home
If you are in the market for a home of your own, or even for an investment property, you may want to investigate the bank REO listings in your region. What is an REO listing? This means “real estate owned” and it generally covers properties which are back in the hands of the financial institutions that provided mortgage funding to the original buyer.
Does this mean that a bank REO is in foreclosure? No, it means that the foreclosure process has been completed and the property is now an asset belonging entirely to the bank. In the modern era many banks will allow the owners to remain in the home and to pay rent. In this way the family or individual is spared having to vacate during a hard financial period, and the bank can receive some income and maintenance on the home too. The inhabitants understand that their home may be sold at any time, but it is still a more agreeable conclusion to the foreclosure process.
Does this mean that a bank REO property is a good way to get a home very cheaply? Not always, and this is due to a number of factors. The first thing to accept or understand is that a bank does not view the homes that they own as liabilities. Since these properties are considered to be assets then, the bank is required to obtain the best selling price possible for them. Generally, this means that they will seek out the actual market value on the home.
How does someone acquire a bank REO? Most banks work specifically with an REO broker to list those properties available. The broker is going to work as a sort of mediary between the buyer and the bank, and will deliver formal bids from anyone hoping to acquire a specific property. The broker will show the home, and answer what questions they can, but most properties owned by a bank are sold “as is”. This means that the buyer is responsible for making any formal inspections and understanding if the condition of the home is going to be suitable for obtaining financing.
For example, a home that has been vacated for several months or even a year may have pests, water damages, and mildew problems. The broker and the bank are under no legal obligation to alert potential buyers to the problems, and cannot be sued or pursued for any sort of compensation should such problems be discovered after the sale is complete. This means that a buyer may have to absorb substantial out of pocket expenses in order to determine if a property is suitable for their needs.
In addition to making a full independent inspection, the potential buyer must accept that the bank REO may be a subject of interest to other buyers in the area too, and that their offer might be declined because others are making higher bids. They must also understand that many banks are flooded with REO properties and foreclosures and that this is all generally handled by the same staff or department at the bank. This means that acquiring an REO home may take a great deal longer than a traditional real estate transaction, but it can be a great way to get a good deal on a fantastic property.
