3 Quick Tips on Buying a REO (Real Estate Owned) Property
Posted under: Home Buying, Tech Tips, Investment Properties | March 7, 2013 5:11 PM |
If forclosed property doesn’t sell at auction it goes back to lender and is titled a REO (Real Estate Owned). At this point the lender assumes full responsibility in selling the property on their own.
Banks view these properties as “hot potatoes”, and want to get them off of their books as soon as possible. This is an excellent opportunity for home buyers looking for a deal. Some banks are more inclined to slash prices for aggressive buyers, but the adage holds true; “pigs get fed, and hogs get slaughtered”. The banks know there are a lot of other people who want a bargain too, and you don’t want to lose a deal because you are bidding too low.
#1- Before you even make an offer you want to make sure you are 100% qualified to buy. Make sure your credit, income, and other loan paperwork doesn’t have any hidden surprises that could jeopardize your purchase contract. The banks are of course in the lending business, so they know what to look for in a strong buyer. Don’t try and cut corners when it comes to preparing to buy. The sooner you can close in a contract the better.
#2- Do your homework on the property before you make an offer. A good agent or appraiser can check out comparable sales so that you know what price points will be justified. The banks expect to take a bit of a loss. If you can give them a laundry list of reasons why your low price is justified it will help their collections department negotiate the write offs.#3- Buying a REO property is different than buying from a private seller. The bank won’t have any emotional attachement to the property which is good, but that also means the upkeep is probably lacking as well. An inspection isn’t a bad idea. Talk to others who have bought before. REO’s aren’t for everyone, but they can certainly provide you with a great opportunity if you’re willing to do a little extra work.
Banks view these properties as “hot potatoes”, and want to get them off of their books as soon as possible. This is an excellent opportunity for home buyers looking for a deal. Some banks are more inclined to slash prices for aggressive buyers, but the adage holds true; “pigs get fed, and hogs get slaughtered”. The banks know there are a lot of other people who want a bargain too, and you don’t want to lose a deal because you are bidding too low.
#1- Before you even make an offer you want to make sure you are 100% qualified to buy. Make sure your credit, income, and other loan paperwork doesn’t have any hidden surprises that could jeopardize your purchase contract. The banks are of course in the lending business, so they know what to look for in a strong buyer. Don’t try and cut corners when it comes to preparing to buy. The sooner you can close in a contract the better.
#2- Do your homework on the property before you make an offer. A good agent or appraiser can check out comparable sales so that you know what price points will be justified. The banks expect to take a bit of a loss. If you can give them a laundry list of reasons why your low price is justified it will help their collections department negotiate the write offs.#3- Buying a REO property is different than buying from a private seller. The bank won’t have any emotional attachement to the property which is good, but that also means the upkeep is probably lacking as well. An inspection isn’t a bad idea. Talk to others who have bought before. REO’s aren’t for everyone, but they can certainly provide you with a great opportunity if you’re willing to do a little extra work.