|Dealing with Distressed Properties |
The most common type of foreclosure property you’ll encounter in your home search is a Real Estate Owned, or REO, property. REOs are properties that have been foreclosed and are now owned by the bank.
REOs may be vacant or in need of repair, but often they look and feel just like other homes for sale, and they’re listed by a real estate Broker. Although they’re typically sold as-is, it’s not uncommon for an REO to be in move-in condition, but the process of buying an REO is different than other home purchases.
With the help of a qualified real estate Broker who knows the terrain of the REO market, your REO transaction will run more smoothly – and you’ll likely get a great deal in the process.
RE/MAX agents lead the industry in distressed property training. Working with a Broker experienced in REO transactions will make the difference between a successful purchase and a frustrating, confusing experience.
An REO property is one that has been foreclosed on and is now owned by the bank.
REO properties fall into two categories:
Where can you find REOs for sale?
Banks are eager to sell these properties and get them off their books. In most cases, they’ll enlist a Broker to clean up the property and list it for sale in the MLS, which means you’ll find these properties listed alongside homes in the neighborhood that are being sold traditionally.
If you’re looking to buy an REO, it’s important to work with a Broker who has experience with foreclosures. Many times the bank will insist on an “as-is” sale and an experienced Broker can help you work through your decision whether or not to move forward with the purchase based on the property’s refurbishing needs.
Pros of Buying REOs:
Cons of Buying REOs:
Short Sales – REOs vs. Short Sales: What’s the Difference?
Here’s something you might be wondering: What’s the difference between an REO property and a short sale?
An REO property is one that has already gone through foreclosure and is currently owned by the bank, which is trying to sell it to a buyer.
A short sale is a real estate transaction that takes place when an owner owes more on the mortgage than the house is currently worth and the bank agrees to a sale for less than the full mortgage balance in order to avoid foreclosure. A property involved in a short sale is not bank owned.
The number of short sale transactions has increased in recent years and you’re likely to run into homes like this on the market as you view properties. As with REOs, short sales can be complicated, so it’s extremely important to find a real estate Broker who is experienced and specifically trained.
Finding the Best Agent
Working with a real estate Broker who is educated and experienced in REO transactions is an important step toward a successful purchase.
Ask any Broker you’re potentially working with the following questions:
In addition, the same tips apply here for choosing a real estate Broker as those outlined in the Tips on Choosing and Working with a Realtor.
Do not venture into REO territory alone. Many RE/MAX agents are thoroughly trained in REOs and have a solid reputation for success. Choose your Broker wisely.
5 Buyer Mistakes to Avoid
Increase your chances of a successful REO purchase by avoiding these mistakes:
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