Buying an REO is similar to buying a short sale except the property is already owned by the lender. The property has already gone thru the foreclosure process and the bank typically lists the property with a qualified real estate agent. Hopefully the agent and the lender have open lines of communication to enhance a smooth sales and purchase
Sometimes the lenders will sell foreclosure homes for less than the past loan balance. Most lenders have ‘guidelines’ for the amount they will accept. In our Truckee and Lake Tahoe areas most lenders are looking for a number within 5% to 8% of the amount currently owed.
Bank owned properties (land or homes or apartments) are called REOs, meaning real estate owned by the lender.
Banks might end up owning the property when no offers come in at the public auction bid enough to cover the amount owed against the property. REO homes are often considered the best way to buy a distressed property because the seller is already out of the picture. At this point you are dealing with the investor’s agent, the bank and the bank’s agent who are negotiating the transaction. Some REOs can be purchased directly from the lender.
For more information, seek the advice of a real estate lawyer, and work with a competent buyers’ agent.
Tags: truckee real estate
