If you’re house hunting in Denver, there’s a good chance you’ve run across the term “bank owned” or “REO” (real estate owned) properties. For first time buyers, these types of properties can actually be a great value, especially in areas with limited inventory. The way to ensure your REO buying experience is a good one is to truly understand how it works. Keep the following tips in mind and purchasing an REO property may be a way better experience than you thought!
1. REO properties can take longer to close – make sure your timeline is realistic
Just as in a traditional sale, after you make an offer on a bank-owned home, the bank may reject your offer if the price or terms do not meet the asset manager’s satisfaction. They may also counter your offer to purchase.
2. Keep expectations low when it comes to concessions
Not every REO property needs extensive repairs, but many do. Banks are in the business of lending money, not maintaining homes. This means when a bank owns a home, it will not make any repairs to the property, regardless of any damage.
If you’re going the REO route, you’ll want to be sure to get an inspection, but don’t expect to receive any money from the bank to make repairs or any repairs to be made for you. In some cases, you can use the inspection report as a way to negotiate a lower sales price, but only if there aren’t multiple offers willing to pay more for the property.
3. Make sure your budget is in check
Don’t assume that all bank-owned properties are listed below market value. When listing a property for sale, the bank’s goal is to recoup as much of their money back as possible. Some of their properties go on the market for more money than they’re worth, but they often drop the asking price after it’s been in the market for a while.
Look at comparable properties in the area – whatever price those homes are going for is along the lines of what you can expect to pay.
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!