"REO" stands for Real Estate Owned. These are properties which have been through foreclosure and are currently owned by the bank or mortgage company. This is different than real estate up for foreclosure auction. 
When buying a property during a foreclosure sale before it goes back to the lender/bank, you must pay at least the loan balance plus any interest and other fees added during the foreclosure process. The buyer must also be able to pay with cash in hand. And on top of all that, you'll get the property entirely as is. That possibly could comprise of prevailing liens and even current tenants that may require eviction. This process is not to be confused with making an offer through a real estate agent on a property that has been put up for sale at the courthouse. Read on for the explanation of an REO or bank-owned property.
A bank-owned property, by contrast, is a much cleaner and attractive proposition. The REO property didn't find a buyer during foreclosure auction. Now the lender owns it. The lender will attend to the elimination of tax liens, evict occupants if needed and generally plan for the issuance of a title insurance policy to the buyer at closing.
Do be aware that REOs are exempt from standard disclosure requirements. For instance, in California, banks are not required to give a Transfer Disclosure Statement, a document that normally requires sellers to make known any defects they are knowledgeable of. By hiring a knowledgeable Real Estate Professional like myself you can rest assured knowing that I will be working in your best interest in the purchase of an REO.
Is REO property in Statesville a bargain?
It is sometimes thought that any REO must be a good deal and an opportunity for guaranteed profit. This simply isn't true. You have to be prudent about buying a repossession if your intent is make a profit. While it's true that the bank is usually anxious to sell it quickly, they are also looking to minimize any losses.
Look closely at the listing and sales prices of similar homes in the neighborhood when making an offer on an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in. The bargains with money making potential exist, and many people do very well buying foreclosures. Still there are also many REOs that are not good buys and may not be money makers.
Time to make an offer?
Most lenders have staff dedicated to REO that you'll work with in buying REO property from them. Normally the REO department will use a listing agent to get their REO properties listed on the local MLS.
Prior to making your offer, you'll want to contact either the listing agent or REO department at the bank and discover as much as you can about their knowledge concerning the condition of the property and what their process is for accepting offers. Since banks almost always sell REO properties "as is", it may be in your best interest to include an inspection contingency in your offer that gives you time to check for unknown damage and terminate the offer if you find it. As with making any offer on real estate, providing documentation of your ability to secure financing may make your offer more attractive, such as a pre-approval letter from a lender.
Once you've presented your offer, it's customary for the bank to counter offer. Then it will be your choice whether to accept their counter, or submit another counter offer. Your deal might be settled in one day, but that's usually not the case. Since offers and counter offers usually allow a day or more for the other party to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer.
So you can see that the process for purchasing an REO home is more time consuming and more detailed than many people think. The importance of having an agent who can maneuver through the process while working in your best interests and keeping you informed every step of the way is vitally important.
You can contact me anytime with more questions, to set up a time to see properties or sign up here on my website for a list of bank owned homes in the area you are interested in. And don't forget there is more information under the "Buying Foreclosures/REO tab right here on mystatesvillehome.com!
