Real estate owned (REO) properties – also known as bank-owned properties – can be a great value and help open up buying options in cities like Denver where inventory is tight. Buying an REO home isn’t drastically different than a traditional sale, but there are a few things to know that will be helpful as you start your REO search. Check out the tips below to ensure your buying experience is a smooth and seamless as possible.
First, what exactly is an REO home? An REO home is one that did not sell at a foreclosure auction and ownership has been transferred to the bank, who now becomes the seller.
Tip #1 – Before the bank puts a property on the market, it will make any major repairs to issues that make the house unlivable. Just like any other homeowner, the bank is a motivated seller, so it will incur minimum expenses to make the property marketable.
Tip #2 – The bank will hire a real estate agent who specializes in foreclosures, short sales, and REO to market the home. As a buyer, you should do the same.
Tip #3 – Don’t be under the incorrect assumption that you can’t view the home before buying. Just as you would with a private homeowner, you may view the REO property before making an offer.
Tip #4 – It’s a good idea to get pre-qualified or pre-approved before shopping or making an offer so that you know the price range you can afford. If you have your eye on a particular REO, getting pre-approved by the lender that owns it may give you an advantage.
Tip #5 – Just because it’s an REO doesn’t mean a house will be dirt cheap. Once a property becomes bank owned, the bank can sell it at a competitive market price, so it won’t necessarily be a bargain unless it’s been on the market for quite a while.
Tip #6 – similar to a foreclosure, some REOs made need extensive repairs. When you make an offer, include language that the offer is subject to inspection. Hire a professional inspector to ensure you learn about all issues and repairs that may come with the house.
Are you ready to start checking out REO properties in the Denver metro area? Don’t underestimate the importance of having an experienced pro on your side. Metrowest specializes in REO sales – give us a shout today, we’d love to help you start the process!