Bank REO Expectations
REO properties are properties that are own by a bank or mortgage company. REO or Real Estate Owned are properties that has been through the foreclosure process and was taken back by the lender after unsuccessful auction.
The property is taken to an auction to free the lender from junior liens. Otherwise, the lender take the responsibility of paying these junior liens.
Buying bank REO’s is a game and a competitive one at that. You need to have at least a better understanding of the rules of the game. How you play the game and your success at the game is up to you. It is up to you to take action and do something with this information.
REO’s, at times are packaged as a whole and the investors should be willing to buy all the properties which are scattered from different location.
Finding the market value of each property would help in determining the purchase price of an REO. When buying in bulk, the price of REO properties is reduced, keeping it cheap for the investors.
The bank usually wants to get rid of the house as quickly as possible, as it is seen as a liability. So it is in their interests to go for a quick sale. They don’t necessarily want to sell it cheap, as they need to minimize their losses, but in the current buyers’ market REO homes in many areas are going for up to 20 percent below market value.
The other big advantage of investing in an REO is that you have the option of inspecting the property thoroughly before you actually close the deal, which option you do not ordinarily have in a foreclosure auction. You have the liberty to walk through the property and make all sorts of inspections without annoying the seller – in this case, the bank since it will help them get rid of the property.
One thing to remember when buying an REO property. It’s sold in “As IS’ condition, meaning the bank will not shoulder any repairs needed and the buyer should take the property under its current condition.