Real-estate owned (REO) properties – also known as bank-owned – can be a great investment for first time home buyers. This particular type of home is one that didn’t sell at auction, and ownership was then transferred to the bank or lender. REOs can be a great option for many reasons: first, in many cases, lenders are motivated because they want the property off their books, and secondly (depending on the bank’s history with the property) these homes may be priced at a discount.
There are other factors to consider, though, as you determine whether buying a bank-owned home is right for you. The four tips below will help guide you through the process and make buying an REO a more manageable process.
- Begin with Financing
REO property or not, the first thing you want to do is secure financing for your property. When you find a lender you like, talk to them about distressed properties and ask which is the best financing option for you. This is particularly important because of the timing of the REO home buying process. As we mentioned above, lenders are motivated to sell and want to get this home off of their books, so the more prepared you are with financing, the better.
- Find an Agent Who Knows REO Homes
If you’re considering an REO property, you’ll want to have an experienced agent who will help you navigate the home buying process. Your agent helps make sure you are finding the best properties at the best possible prices, and they will use their experience to guide you through every stage of the process. Your agent should also be able to tell you if you need to hire anyone else, such as an attorney or an inspection service, depending on your state and situation.
- Refine Your List of Lender-Owned Properties
Just like any home, you’ll want to determine your “must-haves” and “nice to haves” for your property.
- Have the Property Inspected
An inspection should be part of buying any home, but it is crucial for bank-owned homes. Real estate owned properties are typically sold “as is,” meaning the homebuyer is on the hook for any repairs—including major structural issues—that need to be fixed.
If you’re prepared to be patient and thorough, buying a bank-owned property could be a perfect option for you. If you’re interested in checking out REO properties in the Denver area, give Metrowest a shout. We specialize in distressed property sales and would love to help you navigate the waters!