HOW TO PURCHASE REO PROPERTIES

The recent owner defaulted on a mortgage and the bank has repossessed the property following a public auction. Once the property is repossessed by the bank, it is usually listed for sale through a real estate broker. Buying an REO property does involve doing some homework. If a buyer is willing to do a little research, preparation, and with a little patience & persistence there are good deals to be found.
1) Research -
There are a lot of bank owned properties on the market today. However, they are not all good deals. Serious buyers need to know what they’re looking for and to understand that working with someone who specializes in REO properties is important. Be willing to look at a lot of deals and pay attention to what other properties are selling for and how quickly other bank owned properties are closing. Banks are no different than other sellers in that they want to get the highest price as quickly as possible.
2) Preparation -
Before you make an offer – Do your homework. Perform a full inspection, as you would before purchasing any property be sure to have a professional inspection. Have a title search. Have your financing pre-approved. Be prepared to act quickly. Bank owned, foreclosed properties are sold in AS-IS, WHERE-IS condition, so it is up to the buyer to investigate any problems. The discount that you save could easily get washed away to unforeseen expenses. Keep in mind that home owners that have fallen behind have usually been struggling financially for a while and properties may not have received needed repairs and/or proper maintenance for an extended period of time. This is even more so in markets that experience extreme cold due to seasonal changes.

3) Patience -
Banks are usually ready to act quickly on a good offer. However, a response could take as little as 2 days or as long as 2 weeks and unfortunately sometimes even longer. Be ready to wait it out. Do not assume that banks are willing to sell cheap. If you are going to submit a low offer, you need to be ready to make your case by having photographs and repair estimates in writing.

4) Persistence -
Be ready to “Negotiate” and be sure whomever you’re working with is willing to go to bat for you. Don’t be afraid to ask for a better price and favorable terms. If you’ve done your homework and have the information available to back up your case; you just might get a lower down payment, a lower interest rate, more generous concessions toward closing costs, or a lower purchase price.

The information offered on this blog is intended for informational purposes only. Be sure to consult with a real estate professional, attorney, or financial consultant before taking any action.