Tips For Buying REO Properties
The acronym REO stands for the phrase “Real Estate Owned.” An REO is a lender owned property, meaning it has been acquired by the lender as the result of a foreclosure.
Buyers attempting to buy foreclosed properties will need to understand a few basic principals, because the competition on a well-priced REO can be intense. A well-priced REO will draw multiple offers and your competition may well include professional investors. The key to a successful conclusion is to be organized and to have the ability to move quickly.
Some helpful tips include:
1. Realistically establish your maximum down payment, your maximum affordable mortgage amount and your maximum purchase price. You need to be ruthless about these limits.
2. Get yourself either pre-qualified or pre-approved with your lender so that you can move quickly when the time comes.
3. Be prepared to pre-qualify with the selling bank and to allow the seller to run your credit scores should it be requested.
4. Understand that REO properties (that haven’t been destroyed by the prior owner) aren’t gifts. They are generally no more than 10% to 15% below other properties. A corollary to this is the fact that banks are skilled at understanding the market and assessing the market value of a property. As a result, low ball offers are almost never a productive activity.
5. If the property was priced right in the first place you can expect experienced, skilled competition.
6. If an REO property has been sitting on the market without drawing offers, a bank owner will usually not be shy about adjusting the price to move the property. Banks are not in the business of managing property and are generally pragmatic about their pricing.
7. To make your offer more appealing you might want to consider getting your mortgage from the bank selling the property. This tactic might make your offer more appealing, assuming the seller’s loan terms are reasonable.
8. Remember, REO properties are sold “AS IS” and it will be your responsibility to inspect the property and to determine how much money it will take to repair the property and bring it back up to condition. Don’t forget to factor this cost into your purchase limit, as well as the value of the property.
9. Get the most experienced Realtor you can to represent you. Look for a Realtor who is interested in understanding your situation and working toward your goals.
If ever there was a time to use a skilled real estate agent this would be it.
OTHER INTERESTING AND INFORMATIVE INFORMATION SOURCES
- Full Service Property Management In Orange County California A informative website presented by OC Property Management providing usefull information to both landlords and tenants.
- RISMedia Media Center Video presentations of timely real estate topics.
- Real Estate Today Radio The premier online real estate radio station.
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