Finding & Purchasing Bank Owned Properties
If you’re someone looking for a potential new home, there’s a chance that your dream property is a Real Estate Owned, or REO. REO properties can be the perfect deal for you, but it’s important to understand what exactly they are and how you can find available REO properties in your area.
Let’s dive into this topic a bit further!
What Are Real Estate Owned Properties (REOs)?
Real Estate Owned (REO) properties, also known as bank-owned homes, are properties a lender acquires after foreclosure. While REOs are marketed and sold like traditional listings, they aren’t guaranteed to sell for less, as banks price them based on comparable neighborhood sales. Negotiations are handled by the bank’s real estate agents, and buyers can leverage the home’s condition to negotiate. Unlike traditional sales, REOs are sold as-is, so it’s crucial to budget for a professional inspection and potential repairs from deferred maintenance or damage during foreclosure.
How can buyers find REO properties? Bank-owned properties can be found through various channels: a Multiple Listing Service (MLS), where real estate agents can access REO listings; bank websites with dedicated REO sections; free online platforms with house listings which allow searches under “foreclosures”; paid subscription services for specialized foreclosure listings; and federally-backed enterprises which list foreclosures that didn’t sell at auction.
Why Purchase A Real Estate Owned Property?
REO properties can appeal to some buyers who hope to find a good deal, though discounts aren’t guaranteed. Advantages include: streamlined negotiations, as lenders typically minimize back-and-forth; potentially less competition, since traditional buyers might avoid homes in disrepair; and the ability to tour the property, as the foreclosure process is complete. Additionally, lenders usually resolve legal debts linked to the foreclosed property, ensuring the title is clear.
The buying process mirrors that of non-REO homes, so appraisals, title insurance, and comparable price analysis remain essential.
Purchasing A Real Estate Owned Property
While purchasing a Real Estate Owned property may differ slightly throughout the process, it still has many steps that would be involved in any homebuying process. Major steps include:
- Conducting Research on Comparable Property Prices
- Setting An Appropriate Budget
- Getting Pre-Approved for Financing
- Preparing for Negotiations & Offers
- Getting A Home Appraisal & Inspection
- Performing A Title Search Before Closing
Before pursuing an REO property, secure financing by getting pre-qualified or, ideally, pre-approved for a loan. Opting for pre-approval with the lender selling the property may streamline the process. If the property is in good condition, qualifying for a loan or securing standard mortgage rates shouldn’t be an issue.
Research recent sale prices of similar homes in the area and account for renovation costs to set a realistic budget. An experienced agent can help you assess whether the property is a deal or a financial drain and craft a competitive offer. Bidding on REOs often takes longer than traditional home offers, as multiple parties review bids. Be prepared for a counteroffer and consider negotiating other terms, such as a reduced interest rate or closing costs.
Before finalizing the purchase, conduct an independent appraisal and inspection to confirm the home’s market value and condition. Since REOs are sold as-is, factor repair costs into your budget. Also be sure to perform a title search to ensure there are no outstanding taxes or legal debts, even though lenders typically clear titles before listing properties.
Conclusion: Purchasing Bank Owned Properties
Real Estate Owned (REO) properties can offer unique opportunities for buyers, but they require careful consideration and preparation. From understanding what REOs are to navigating the purchase process, thorough research, proper financing, and the right strategy are key to securing a good deal. While REOs can come with advantages like streamlined negotiations and clear titles, they are sold as-is, making inspections and budgeting for repairs essential. With the right approach and expert guidance, an REO property could be the perfect fit for your next home or investment.
Need a real estate agent with expertise on REO properties in the Houston, Texas area? Oscar Combs Realtor offers Real Estate Owned services for both lenders and buyers. Contact us today to learn more.
