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A Guide To Purchasing Bank Owned REO Properties

By Anita Ortega


Real estate owned properties, abbreviated as REOs are properties that are owned by financial institutions such as banks after unsuccessful foreclosure auctions. Some foreclosed homes fail to get bids especially if the amount owed to a lender is higher than the value of the property. The ownership of such homes reverts to the lender and they become bank owned real estate properties. Banks handle evictions if necessary and they terminate the mortgage.

Banks that own REO properties may also perform some repairs on a property. They also negotiate with the internal revenue service to remove tax liens and pay off any dues owed to a homeowners association. People who want to buy bank owned REO properties receive a title insurance policy. They are also provided with the opportunity to have the property inspected.

When buying a real estate owned property, it is important to investigate the property before you make an offer. Make sure that the asking price is comparable to the prices of other homes in the neighborhood. It is also important consider the cost of repairs or renovations and the duration it will take to complete them. Banks usually prefer selling properties in their current condition but they usually offer a section 1 pest certification if you include it in your offer.

Banks allow buyers to get all the inspections they want at their own expense. It is important for investors to ensure that their offers include an inspection contingency period allowing them to end their agreement to purchase a REO property if an inspection report indicates the presence of significant damages that will not be corrected by a bank. Investors should request banks to give them a credit after they complete their inspections or request them to repair the property.

Banks are often willing to renegotiate an offer in order to complete a transaction instead of listing a property again. Even though most lenders do not offer financing of their REOs, you can still ask if you can finance the property you want to buy. You can do this if the home you are purchasing is in need of extensive repairs.

Offers to buy a real estate owned property are usually faxed to the financial institution. You should provide the listing agent with original documents. You should also provide the listing agent with a pre approval letter and a buyer biography. Your goal should be to make an offer that is easy for a bank to accept.

Banks may follow a different process as they sell a REO property but they usually have the same goal in mind. Banks always seek to sell REO properties at a price that is close to their full market value. When you submit your offer to purchase a REO property, the financial institution will make its counter offer. This offer is usually intended to demonstrate to interested parties that the lender tried its best to sell a home at the best price possible.

Your offer will be reviewed and approved by a number of individuals and companies. Real estate owned properties offer several financial advantages while minimizing the risk associated with buying a foreclosed property. The foreclosure process eliminates all judgments, liens, title problems and taxes. It therefore allows for an easy transfer of ownership.




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