An REO (real estate owned) property is a foreclosure that did not sell at auction and ownership has transferred to the bank or lender. These types of properties are attractive for several reasons. In many cases, lenders are motivated sellers who do not want to sit on their REO inventory, and (depending on the bank’s history with the property) these homes may be priced at a discount. When considering this type of property, make sure you know the steps involved to make the process as smooth as possible.
1.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 what financing options are best for you. 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.
2.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
3.Refine Your List of REO Properties -Just like any home, you’ll want to determine your “must-haves” and “nice to haves” for your property. Some major characteristics that should be taken into account, include:
- Listing price
- Significant repairs needed (and the overall impact on price)
- Location (and proximity to a school, workplace, or other desired area)
- Number of bedrooms and bathrooms
- Quality of neighborhood and surrounding areas
- Community Resources in the area, such as parks, gyms, places of worship, etc.
- Lender-specific contingencies or requirements
4. 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.
A bank-owned home can be a great opportunity for home buyers or investors to find a good deal—but only if you’re willing to be patient and thorough. If you think this might be the right type of property for you, contact Metrowest. We specialize in distressed property sales and would love to help you navigate the waters!