Archive for February 10th, 2011

Bank Owned (REO) -Basics

A bank owned property  is the result of a foreclosed property that did not sell at the auction (Sheriffs Sale). The property now goes back to the bank and is referred to as a Real Estate Owned property (REO).

When it comes to buying, a bank owned property is a much easier deal to go through than a short sale  or the foreclosure auction for several reasons:

  • Buyer negotiates directly with the bank because the (bank) is the seller.
  • Title, back taxes, liens, HOA dues, etc. are cleaned up and taken care of by the lender. This may not always be the case when purchasing a short sale property.
  • An REO will be empty so no tenants or squatters have to be evicted
  • Home is usually listed below market value so that lender can clear their inventory. Remember, if a bank has property with no one paying a mortgage on it, they lose money.
  • The lender (seller) will usually pay buyers closing costs
  • Bank owned properties are usually in better condition than short sales. This is because the lender knows that to move the property they have to make  it marketable. A short sale property sometimes has damage that either the seller could not afford to fix or may have done in spite because they are loosing their home. (The way some of the homes are intentionaly damaged by the owner is criminal in my opinion)
  • Quicker closing time. Generally an REO will close with 30-45 days, while a short sale can take months.

Bank Owned properties will continue to be a big part of the overall real estate market for the next few years. Buyers should not be afraid to look at these properties for fear that the banks (lenders) will be hard to deal with.  It is quite the contrary, so go ahead buyers, get out there and help clear up some of this inventory and get a great deal at the same time!

If you would like to view Bank Owned properties please go to my website (no sign up required!) : www.BoiseRealEstateChick.com

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