When you are in the hunt for a new property to purchase, you should always check out REO properties. Finding an REO property will easily save you thousands of dollars in obtaining that property you want to buy. But before everything, what is REO? REO stands for Real Estate Owned. It is a foreclosed property that wasn't sold in any type of auction that was scheduled by the property lender. The lender can be a bank, mortgage companies or even a credit union, sometimes private financial companies. When the auction fails, it is brought back in order to get rid of it as soon as possible.
This is because banks aren't really in the business of getting rents from people. They will want to remove these REO's from their books as soon as possible. That's why you as a property buyer should know about this bank owned homes. Before you ask yourself the question, 'How I can buy REO?' You should first know where to locate REO's.
Real estate companies would always want to keep properties like this on the record, for legal purposes. That is why the first place you want to look for REO's would be the newspapers. From ads posted by banks or private companies that want to get rid of their real estates, there are also agents that list REO properties on the real estate pages in newspapers. Although banks aren't really required to talk about their properties, it would be really worth your time. Also, try to make friends with real estate agents. Chances are that they know one or more properties that are considered REO.
There are also different people that handle REO properties. Most likely that you will find a property that is handled by a real estate broker, some companies may even have an entire department solely focused entirely on this type of property. Also keep in mind that foreclosure properties are the same with REO's, the only difference is that when a property is tagged with an REO label, it means it is the end of the foreclosure.
Just like any other type of property that is for sale, there are several advantages and disadvantages to them all. Knowing the advantages and disadvantages can easily help you decide on whether to buy bank owned homes or not.
Transparency - When a property is sold as REO, you will not need to worry about hidden surprises that usually happen to people when buying properties. This is because the company that is in charge of this certain property already settled and cleared things up before it was even handed to them.
Extremes - A property that is owned by banks or any time of private company always goes to the extremes and seldom falls in the middle. You can either get a very good property that doesn't need repairs, or you can get something that doesn't even look like it has been occupied for decades. So make sure that you have each property checked by professionals.
REO properties are usually sold as it is. The lender how now owns the property that you want to purchase will not shoulder any repair costs whatsoever. That is why as a buyer, you have the right to inspect the property and even cancel any transactions if you find something you do not like about it. Or, you can always negotiate for a lower price.
Bonuses - Some lending companies usually would accept lower down payments, for they only want to get rid of the property as soon as possible. That is why it really pays to always ask for questions.
When working with REO properties, always ask questions to make things clear. You might get a chance to buy the property for a much lower price than expected. Though you also need to put in mind that you need to expect the worst, again these are as is properties that are in their possession. You might get lucky, but always bear in mind that renovation is still the key to make your purchase worth it.