REO-Real Estate Owned
REO is a Real Estate Owned property. REO is a property that has reverted to the mortgage lender after a foreclosure auction did not sell. A foreclosing beneficiary will typically set the opening bid at a foreclosure auction for at least the outstanding loan amount. If there are no bidders that are interested, then the beneficiary will legally repossess the property.
Most REO homes are sold “as is” so it’s important to do “due diligence.” A home inspection is very important to know what condition the property is in. “As is” means exactly what is says, what you see is what you are buying. Basically the seller isn’t planning any work to fix up, clean, or repair any damages that exist. “As is” properties can be unlivable or can be a “move in” ready home. Understand the true nature of the REO property under consideration.
The costs for renovation or repairs and the time required to complete them is a major concern with a REO property that is in poor condition. Budget appropriately and realistically to recognize the full price of buying an REO property.
Is the reo priced to be a good deal or not? This is an important question. Make sure that the comparables (CMA) is done properly. Coffee Real Estate agents understand how to get correct comparables to fully understand the price-value decision. Contact Coffee Real Estate and talk to an agent to get a fuller appreciation of how to judge if the REO price is a good value for the buyer.
REO properties can move quickly. Therefore it is important to be financially ready. Cash buyers must have the funds ready in an account they can prove funds are available. If a mortgage is needed, a pre-approval letter must be ready to be written by the lender or mortgage broker immediately. No offer will be accepted by REO companies without a clear understanding how the property will be financed.
REO transactions can take more time and paperwork from the offer all the way to close of escrow. After the offer is submitted, there is a wait for a response of acceptance or a counteroffer. Since a REO property is owned by an organization, it may have to go to a committee or a department that handles the REO negotiations. This can take a while to get all of the paperwork processed. REO transactions can move fast at times and then very slow. Be ready for the changes the REO transaction requires.
REO properties are an important way to find a home or investment property. A professional real estate company can help navigate the process and avoid problem areas. Coffee Real Estate has a team of professionals to guide the REO buyer through the process. They can help deal with many of the frustrations with REO properties.