How To Buy a Bank-Owned REO Foreclosure

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What is an REO?

REO is an acronym for real estate owned and is industry jargon for foreclosure property repossessed by banks or lenders. If a lender or bank is the highest bidder at a foreclosure auction — or if no third party bids at the auction — the property reverts back to the lender and becomes an REO. REOs are owned by banks. Lenders go to great lengths to sell REOs. For banks, however, bank-owned homes are a liability.

Where can I find REOs?

Finding bank-owned REO properties is easy -- you can search right here on our website.  The listings on our site include the entire MLS and all properties listed by all brokerages in our area.  We update our website several times daily, so you are sure to see the most up-to-date information. Generally banks list their properties with real estate agents and require that they are placed in the MLS for maximum exposure to the buying public. 

 

Search Here for REO Bank-Owned Foreclosures

 

How do banks sell REO property?

Every bank is a little different when it comes to selling REO property but one thing remains the same. They all want the highest price possible and do not want to sell the property cheap. The other item that is similar among all banks is that they usually have a separate department set up to only handle REO property.

Typically, when you make an offer to a bank on an REO property, you can expect to receive a counter offer. Sometimes it will be much higher than expected, but banks do this to show investors that they are attempting to get top dollar for the property. If you really want to buy this home, expect that you will have to make a counter offer to the banks counter offer.

If the offer becomes accepted, you may experience a delay getting a final approval or because the offer may need to be approved by someone else at the bank. Typically, it can take an extra 4-5 days for your offer to get final approval.

What about the condition of the property?

Be prepared to buy the property as is, or make a strong offer to get your repairs made. Banks will always push to sell the property "As Is" to avoid coming out of pocket with additional money. Working with a solid Klacik Real Estate agent experienced in selling REO bank-owned properties can help your negotiations.

In addition, make sure you get a good inspection of the property so you know exactly what you are buying. It is so important to have a good physical inspection of the property.

Most contracts call for a time period to back out of the transaction should you find problems with the home. Make sure you have enough time to back out of the transaction if you need to and do not jeopardize your deposit.

Writing up an offer

Before the offer is made, your real estate agent will find the answers to the following questions for you:

    Is the property being sold "As Is"?  Is the bank willing to do any repairs?

    Have any inspections taken place for the property? If so, can we be provided with a copy of these inspections?

    Has the bank agreed to do any repairs to the home?

    How long should we expect the bank to respond to our offer?

The offer is typically submitted to the bank via an on-line system.  At this point you must have a little patience. It can take a few days for you to get a response from the bank. Many Realtors work weekends, but banks do not typically have anyone around after 5pm or on the weekends so you will not get a very quick response.

Most banks require that you have a pre-approval letter, or proof of funds if you are paying cash, to go along with your offer. They also usually stipulate the amount of earnest money that is required.  These things must be in place before a bank will respond to your offer in most cases.

At Klacik Real Estate we have the expertise to help you navigate a successful REO bank-owned property purchase.  We would be happy to help you prepare and make an offer on any bank owned property. We have the experience to make it happen.

 

Search Here for REO Bank-Owned Foreclosures