If you’re considering adding a bank or real estate owned (REO) properties to your home search, it’s crucial to understand exactly what these types of homes are and how they can be a great value.
REOs are homes that have been repossessed by banks after the owners were unable to keep up with mortgage obligations. In the event, a homeowner fails to make their mortgage payments, the bank that originated the loan will foreclose on the property and take control of it. In an attempt to recoup any lost revenue, the bank will try to sell the home at a foreclosure auction. If the home fails to sell at auction, it will sit on their books as an REO.
Advantages:
1) They Are Void of Title Discrepancies
Title discrepancies are all too common in the world of real estate investing. From liens and unforced errors in public records to title discrepancies, there are a number of reasons that can prevent a prospective buyer from taking ownership of a property. Additionally, any issues casting shade on the status of a home will need to be addressed prior to taking ownership.
REO properties are rarely accompanied by title discrepancies. If nothing else, the bank responsible for the repossession will immediately extinguish any liens against the property and make sure that taxes are brought current.
2) Banks are motivated sellers
Banks are highly motivated to rid themselves of the homes they repossess, and buyers ready to take advantage of the opportunities they offer will be rewarded accordingly. If you get your finances in order, obtain mortgage preapproval, and go in with a strong offer, you can go from offer to closing fairly quickly. Just remember to get all your ducks in a row before making an offer.
3)The bank may consider making concessions for buyers
More often than not, buying REO properties will coincide with “as is” pricing in order to expedite a sale. However, it’s safe to assume there will be little room to negotiate a cheaper price when buying REO properties, but that doesn’t mean you can’t get the bank to make a few concessions of their own. Remember, the bank is in no hurry to hold on to the properties they repossess. And while they certainly won’t give them away, they may be willing to meet somewhere in the middle on more than a few things.
If you’re ready to start checking REO properties, the first thing you need is an experienced professional on your side. Contact Metrowest today – we specialize in REO sales and would love to help you start the process!