| Buying REO homes can be an excellent and very | | | | your appraiser usually have to consider the seller's |
| profitable "way in" to real estate, especially for the | | | | convenience for entering the property for inspection. |
| novice. | | | | When the property is being sold by the bank, you can |
| REO, or real estate owned, properties are properties | | | | have immediate access at your own convenience. |
| which the lenders have taken back into ownership | | | | This makes the whole purchase process much faster. |
| after they failed to sell at foreclosure auction. The | | | | - Because the banks want a quick sale, they will |
| lenders, usually banks, will then try to sell the properties | | | | usually be open to negotiation over rehab costs, closing |
| as quickly as possible. | | | | points, liens etc. They may also accept a lower down |
| If you are interested in the idea of buying REO homes, | | | | payment. You stand a better chance of being able to |
| don't let the idea that they are foreclosed properties | | | | negotiate if the house has been on the market for 30 |
| put you off. It doesn't necessarily mean that there is | | | | days or more. |
| anything wrong with them - they can range from poor | | | | However, you have to bear in mind that there are also |
| to perfect condition. It just means that the owners | | | | some disadvantages to buying REO homes. |
| couldn't afford the repayments for all sorts of reasons. | | | | - Although there are no problems about being able to |
| There are a number of advantages in buying REO | | | | inspect the property, the bank will usually not agree to |
| homes, especially for the first-time buyer. | | | | carry out any repairs and the property is sold "as is". |
| - Buying REO homes is often seen as a very safe | | | | - The bank will usually require additional paperwork. |
| way to buy or invest in property, especially for the | | | | - You cannot obtain disclosures as to the history or |
| novice. There is no risk to the purchaser and you can | | | | condition of the property. |
| be certain of the ownership, as the bank provides a | | | | - Some people are worried about buying REO homes |
| good clear title. | | | | because of a fear that the previous owners may |
| - The bank usually wants to get rid of the house as | | | | arrive and cause problems. This in fact very rarely |
| quickly as possible, as it is seen as a liability. So it is in | | | | happens and if it does, they have no legal rights and |
| their interests to go for a quick sale. They don't | | | | you can call the police. It is just the possibility that |
| necessarily want to sell it cheap, as they need to | | | | causes a worry for some buyers. |
| minimize their losses, but in the current buyers' market | | | | On the whole the advantages of buying REO homes |
| REO homes in many areas are going for up to 20 | | | | outweigh the disadvantages, especially for the |
| percent below market value. | | | | first-time buyer, or the investor for whom time is of the |
| - The bank will usually have covered all the taxes and | | | | essence. Provided you are aware of the possible |
| liens, although banks do vary in their policies. | | | | drawbacks and have a strategy for dealing with them, |
| - If you are buying a house in the usual way, you and | | | | it can be a very good proposition. |