Common Questions and Answers:
What is a bank owned or otherwise known as REO property?
When a lender takes back a property after going through the foreclosure process, it becomes 'bank owned'. Now the lender has an asset on their books that does not belong. Their goal is to sell the property so they can free up the cash to reinvest in new loans. Lenders do not want to be landlords.
How do REO lenders price their properties?
Since lenders do not want to keep the property, they typically employ several REALTORS® to give them a price opinion (BPO) on the property's current market value. Lenders we work with typically want to know where to price the home to sell in 30 to 120 days. And then, like any seller, the bank lists the property for sale with a qualified REALTOR® based on this pricing information.
What's the different between buying a 'pre-foreclosure' vs. a bank owned property?
Unlike buying a property in foreclosure (where you are usually trying to negotiate with the seller and/or bank for a short sale) or at auction (where you must come check in hand for a minimum bid, without inspections), buying a bank owned property offers a layer of protection along with aggressively priced opportunities. In addition, the lender will have already removed other liens and any back taxes, making this purchase very similar to a regular purchase - except for the aggressive pricing.
What kind of savings can we expect?
Since a lender is looking for a quick sale, they are often willing to offer incentives and other benefits to prospective buyers. We've seen savings 10 - 20% off market value PLUS additional credits for closing costs and sometimes repair allowances.
What else should we know?
Most of the time the lender will not make any repairs to the house and will want to sell it in 'as-is' condition. But the good news is - you can still have a home inspection to determine what types of repairs are needed and then decide whether or not you want to move forward with the purchase.
Like any investment, be sure to do your research, especially if the price seems 'to good to be true'. For no cost to you, you can have your own agent working for you to evaluate current market sales and current market actives to determine whether or not the property truly is a good deal.
In addition, your buyer's agent will be able to show you other bank owned properties so you can compare apples to apples, help you put together an attractive offer, negotiate on your behalf, suggest qualified home inspectors and protect your interests throughout the transaction. It really doesn't make any sense at all to try to go it alone.
Another thing to remember. Since you are dealing with an REO department, several people will probably review your offer and it could take more time than you expect to get a response. Again, be patient and let your agent keep you informed and guide you through the process.
How do we get started?
Bank owned properties are typically mixed in the haystack of listings, so the key is to find an agent who knows how to find the bank owned properties and pinpoint the best deals - the needles in the haystack. Make a list of your favorite areas and let us know when you are ready to start looking. E-mail email@example.com or call 303-522-0255 to set up your private showings today.