What does REO mean? REO stands for Real Estate Owned. In the current real estate market, banks and lending institutions have had to take back thousands of properties in the foreclosure process. Bankers are now finding themselves in the real estate business instead of the lending business. Whole new departments are springing up inside of a bank’s organization. In 2005 you never heard of a short sale department or loss mitigation. Now they are commonplace.
How Do I Buy An REO property?
Most banks and lenders work with real estate companies to sell off their real estate inventory. Additionally you buy Fannie Mae foreclosed properties through real estate agents. It is not uncommon to see foreclosure properties listed for sale by ReMax, Century 21, Prudential, Realty Executives and Coldwell Banker. You can contact any real estate agent that has access to the multiple listing service.
What Do I Need To Know To Buy An REO property?
- Keep in mind that when you are buying an REO property that you are buying a property that has probably not been lived in for quite a few months, or not maintained very well while the homeowner who had the property exited. That initial visit could be an unpleasant one – keep your imagination alive.
- Be sure to have a thorough property inspection done during your inspection period. Just because an REO property is cheap does not mean that it is a good deal. There may be thousands of dollars in deferred maintenance to take care of. You may want to go to Home Depot and see what things will cost to fix or repair before you buy. Make sure that you have the money to fix the essentials.
- Most REO homes are typically non-negotiable in terms of getting the bank to fix, update or upgrade the property. What you see is what you get. If you don’t like something then the advice is do not try to buy it.
Buying An REO Home Can Save You Money
Buying an REO property can save you a lot of money. Typically the bank wants to sell it quickly and is more likely to price it more aggressively in the market. You may even be able to negotiate with the bank to pay all of your closing costs. Any knowledgeable real estate agent would know how to structure a real estate purchase contract to negotiate for paying your closing costs.
Do I need to use a Real Estate agent to by an REO property?
There is no law that says that you need to use a licensed real estate agent to buy a property. You can represent yourself in the transaction if you like. I would probably only do this if you have experience in the real estate business.
A good realtor can save you a lot of time and money navigating the sometime frustrating real estate waters. They are also experts at assisting home buyers looking at homes with a critical eye. Their eye is trained to see things not only in the home, but outside the home too.
If you do not know what you are doing hire an agent. You may find yourself being pennywise and a dollar dumb if you don’t. Besides, you don’t pay the real estate agent to represent you on buying a home the seller does. So why not use them?
