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Real Estate Owned Property

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By : Sonia Smith    99 or more times read
A real estate owned property is also known as an REO property. The government presently owns this type of home or the bank after it fails to sale in an auction. Real estate owned homes are common since most of these properties for sale during auctions are worth less than the amount that is owed to the bank. In most foreclosures, the minimum bid amount is equal to the amount of loan, interests accrued and other fees associated with the foreclosure process.

When a property is in REO, the bank goes through the process of selling in on its own, will remove any liens and other costs on the home, and sells it on the market. Investors on real estate normally go after these homes since it is not a bank’s business to own homes and in some instances, the property could be purchased at a discount, which means lesser amount than its market value.

A property in REO is now owned by the bank and the mortgage no longer exists. The bank may handle the process of eviction and could do repairs. Furthermore, the bank will also negotiate with the IRS and remove the tax liens and pay for homeowner’s association fees if there are. A buyer who will purchase a real estate owned property receives a title insurance policy and the chance to investigate the home. Nevertheless, REO properties might not always mean a good bargain. If you want to purchase one, do your research thoroughly before you make an offer. Make certain that the price you will offer is comparable to other properties in the neighborhood. Consider the renovation expenses and how long it takes to accomplish the task. As soon as you make an offer, the bank in general will present a counter offer that may be higher than expected, so you should plan to make a counter to the counter offer.

Most banks will sell REO homes as is but will allow a buyer to do home inspections at the buyer’s costs. Nevertheless, most banks do not agree to do repairs on the property. The offer that you should make for an REO home includes an inspection period that lets you terminate the sale in the event that the inspection will reveal unknown damages that the bank refuses to correct. Before you make an offer, it is important to ask your agent to get in touch with the listing agent and ask important questions like inspection reports, the work or works that the bank agrees to, find out if there is an ‘as is’ form, how long the bank takes to accept the offer and how your agent delivers the offer.

REO home offers are usually faxed to the bank and the listing agent will require an original copy. Bear in mind that due to the absence of a face-to-face presentation to the bank, you should provide the listing agent with your pre-qualification letter or a pre-approval letter. Your offer should be easy to accept. REO properties are good investments if you do your research carefully and should weigh your options before you proceed in buying.
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