What is an REO property?
REO stands for “Real Estate Owned” by banks and mortgage companies. These properties have gone through foreclosure and are now owned by the bank or mortgage company.
What is the condition of these homes?
Sometimes the asset manager responsible for the home will allow the broker to make repairs and cosmetic improvements to enhance the marketability. Others are sold “as-is”, with the purchaser responsible for repairs.
How is the price determined?
Prior to listing the property on the market the bank’s asset manager will order an appraisal and have the broker advise them about the condition AND value of the property? They are then priced accordingly. When a home is to be sold “as-is”, the value will be reflected in the sale price; the amount of the previous mortgage or the amount bid at the foreclosure sale do not determine the value.
Can the mortgage be assumed?
No. After the property is foreclosed there is no mortgage. The bank or mortgage company owns the asset.
Are these homes listed in the Multiple Listing Service?
Yes, they are listed in the same way any other home for sale is entered into the MLS and related internet sites.
What is A "foreclosure"?
Foreclosure is a procedure whereby property pledged as security for a debt is sold to pay the debt in event of default in payments or terms. If a homeowner with a mortgage on their property fails to make payments on that loan, then the lender will file a law suit to take back the property for non-payment of the loan. This action is called foreclosure.
How is a HUD property different from any other foreclosure?
HUD homes are FHA-insured loan foreclosures. When someone with a HUD insured mortgage can't meet the payments, the lender forecloses on the home; HUD pays the lender what is owed; and HUD takes ownership of the home. Then we sell it at market value as quickly as possible.
How are foreclosure properties identified on the MLS?
Most of the time they are not. They are listed just like any other property. The best way to find them is by working with a real estate broker who specializes in this kind of home.
Does the amount owed on the property determine what the bank will sell for?
No. When negotiating with an asset manager at a bank for the purchase of a foreclosure, keep in mind that this is a professional seller. A good asset manager will order appraisals and hire a broker to advise them about the property's condition and value. Then, they price them accordingly.
How are negotiations handled?
Once you have determined you wish to make an offer on a bank owned home, you can write the offer with a broker with experience in Bank Owned Properties. The offer is then presented to the Bank Seller. The Bank Seller will accept, counter offer or reject the offer. Once an agreement is reached either the original contract offer is amended or a new contract is prepared containing the agreed upon terms.