In this case what is owned is always more than the property is valued at a limited number of foreclosure auctions end with a successful sale. At this point the property is then repossessed by the lender and becomes an REO property.
Why is an REO Property Preferred?
When buying an REO property the process is very similar to a short sale with the exception that the property for sale is already owned by the lending party. The property has already been repossessed by the bank with a foreclosure action. Many times lenders will sell the acquired property for much less than the previous loans remaining balance.
Lender owned properties are referred to as REOs, this means the real estate in question is owned by the bank.
REO properties are often considered the easiest way to buy a distressed home because the previous owner is already out of process. The waiting period of the short sale is no longer necessary. It is just you and your real estate agent, the lender and the lender’s agent conduction the negotiation for the property. The downfall is that not all banks will be easy to work with. Keep in mind that the seller of an REO property is a lending company and not an individual. This is the point where I come in with my experience in REO purchases for my clients. In many instances the bank already has numerous other offers on the table.
Selling REO Properties
Now that the bank owns the property the mortgage loan is now extinguished. The bank in this case handles the eviction process, and necessary repairs if required for sale. A negotiation process with the IRS is conducted by the bank to remove any tax liens and pay off dues owed to the homeowner’s association. A buyer of an REO property will receive an insurance policy for the title and the opportunity for property inspection. In some cases bank owned properties might not be a great bargain. Occasionally the properties are incorrectly priced and sit vacant without activity for months. This is where I come in to help, I have sold REO properties and know the pricing trends and know how much the banks will typically reduce their listed price.
In other instances REO properties are much underpriced, sometimes this is even a mistake. Occasionally it is done intentionally to and a short period of time is given for the best and highest offers. Under this scenario I will guide you through the process with the secrets that will help your offer stand out from the others.