WHAT IS AN REO? REO vs Foreclosure An REO (Real Estate Owned) is a property that goes back to the mortgage company after an unsuccessful foreclosure auction. If there was enough equity in the property to satisfy the loan, the owner would have probably sold the property and paid off the bank. That is why the property ends up at a foreclosure or trustee sale. Foreclosure sales begin with a minimum bid that includes the loan balance, any accrued interest, plus attorney's fees and any costs association with the foreclosure process. In order to bid at a foreclosure auction, you must have a cashier's check in your hand for the full amount of your bid. If you are the successful bidder, you receive the property in "as is" condition, which may include someone still living in the property. There may also be other liens against the property. Since what is owed to the bank is almost always more than what the property is worth, very few foreclosure auctions result in a successful sale. Then the property "reverts" to the bank. It becomes an REO, or "real estate owned" property. REO's A bank owned property might not be a great bargain. Before making an offer make sure that the price you pay (if you´re successful) is comparable to other homes in the neighborhood. Consider the costs of renovation, including time to complete them. How Banks Sell REO Each bank/lender works a little differently, but they all have similar goals. They want to get the best price. Generally, banks have an entire department set up to manage their REO inventory. Your offer will probably have to be reviewed and approved by several individuals or companies. Even once an offer is accepted, the bank may insert wording like "subject to corporate approval with 5 days." Property Condition Banks always want to sell a property in "as is" condition. They may allow you to get all the inspections you want (at your expense), but they may not agree to do any repairs. Your offer should include an inspection contingency period that allows you to terminate the sale if the inspections reveal unanticipated damages that the bank will not correct. Even though you agreed to "as is," always give the bank another opportunity to make repairs or give you a credit after you´ve completed your inspections. Sometimes they´ll re-negotiate to save the transaction instead of putting the property back on the market, but do not assume that will be the case. Making An Offer Before making an offer, have your agent contact the listing agent and ask the following: Are there any inspection reports? What work has the bank agreed to? Is there a special "as is" form? How long does it take the bank to accept an offer? How does your agent deliver the offer? Offers are usually FAXED or emailed by the listing agent to the bank. Keep in mind: nothing happens evenings and weekends (banks are closed) Since there is no face-to-face presentation to the bank, we need to provide a pre-qualification and a pre-approval letter. For more REO or Short Sale listings, email me at: junedon78@gmail.com Certified REO Specialists(CFS) Certified Short Sale Specialists(CSP) Certified Relocaton Specialists (CRP)