How Do I Find an REO Buyer’s Agent Who Knows Bank-Owned Home Sales?
You’ve been driving past that cute bungalow for years but didn’t think you could afford the neighborhood. But then, it went into foreclosure and didn’t sell at auction, and now it’s listed as an REO, or real estate-owned property. Could you finally have a chance to make it yours? Yes — but you’ll need an REO buyer’s agent.
Before you start shopping for distressed properties, you should know what you’re getting into. Even experienced homebuyers who’ve already bought and sold a few homes will find the process much different, and they will also need an agent who specializes in REO sales.
What’s an REO home?
A “real estate-owned,” or REO, home is one that’s owned by a bank. The owner either forfeited it to the bank, or the house went to foreclosure auction and didn’t sell. Whatever the case, now the house belongs to the bank.
Buying a bank-owned home isn’t the same as buying a house from a private homeowner. In a typical home sale, if the home inspection finds issues, you can negotiate with the seller. But with an REO sale, you generally won’t get an additional discount on the price or be able to ask for repairs.
Typically, banks build the home’s condition into their asking price, which is why these sales can be cheaper than a non-distressed house in the same neighborhood. It’s rare for banks to bother fixing up an REO home. They’ve already lost money in the foreclosure process and are trying to minimize further losses.
While you can still get an inspection on an REO home, your choices post-inspection are to either proceed with the sale or walk away. “The inspection period varies from seven to fifteen days in Florida,” says Cosmo Spellings, an experienced Florida-based agent who often works with REO buyers. You need an agent who’s on top of the bank’s timeline.
If you’re handy, and you don’t mind putting some elbow grease into the property, you can get a great deal.
