THE FORECLOSURE SALE PROCESS
An REO education
J.C. Agajanian | Realtor & REO Expert
Bank Owned properties, commonly known as REO’s (Real Estate Owned) are properties that have already going through the foreclosure process and have not sold at auction to any private party; therefore foreclosed homes have been taken back by the bank and are now “Real Estate Owned”. This is a bad thing for banks because they are in the business of lending and receiving payments, not owning properties. As a result, the homes are listed at very aggressive prices to insure a quick sale.
Buying an REO property is not dramatically different than buying a traditionally sold property. It is far more user friendly than other means of purchasing a property at a bargain.
- The auction process is an art of its’ own and most importantly requires CASH.
- The Short Sale process is not for the faint of heart. It can take months to hear back from the bank as to whether or not they will even approve the purchase price. Unfortunately, after all that work they often do not get approved or in some cases, go into foreclosure after all.
Once an REO has been taken back and the bank has acquired possession of the property they usually perform only fundamental services. They will mow the lawn, do a janitorial cleaning and secure the property; they don’t do much beyond that. If anything further is necessary, it will be up to the listing agent to recommend the work and give explanation as to why it is necessary, and then wait for an authorization.
After that they’ll need to establish value. The price of the previous loan that was foreclosed on generally does not have any effect on the price that the bank will use to market the property. They will ask the listing agent, and sometimes-certified appraisers to complete a report using recently sold and actively listed comparable sales to decide how much the property is really worth. From there, they will usually pick the lower end of this value range to insure that their property sells faster than the competition. The bank will not however, sell homes at half or fractions of the current market value, it’s simply a myth.
Finally, the time has come to put the house on the market. The banks often use a Realtor who has expertise with the bank-owned process and then market it just like a normal listing with two major differences:
- The first one is that these properties are sold “As Is”. This means that the bank has no intentions of entertaining “buyers request for repairs”. What you see is what you get so make sure to get a good home inspector so that you can rest easy with the knowledge of how much or how little work this home is going to need.
- The other big difference is the price. REO’s are generally priced lower than any similar home in the neighborhood; therefore get a lot of activity and a lot of offers as well.
Though many people will council their buyers to come in low with their offering price, this often leads to disappointment. In the current Real Estate environment, these properties are in high demand and low supply which means that when you find the home you’ve fallen in love with, you’ll need to act like it. These conditions may change in the near future but as of now, there are more buyers of REO’s than properties for sale.
This is where we come in. By accessing SurfsideHomes.com, you have found the Realtors with the direct connection to the banks. We are experts in the REO business and have established close working relationships with some of the largest banks in the nation. Because of this, we are the ones who list these properties and can help you go from interested, searching, or hope full to a new homeowner.
