In today’s housing market, a potential home buyer has so many purchase options when it comes to purchasing a home. A home buyer can purchase a home from the homeowner, from an investment company, or from a bank. Buying a bank owned property is becoming more popular among many people. With the large number of bank owned properties on the market, it is no wonder why many people are choosing to go in this direction.
What is a bank owned property
Definition A bank owned property is also known as a real estate owned (REO) property. It is a home which goes back to the bank or mortgage company if it is not sold at a foreclosure auction. How does a home becomes a REO property? When a person’s home is lost due to foreclosure, it is not immediately given back to the bank. There is a short process through which it goes. A home lost to foreclosure first goes to a foreclosure auction, where the home is attempted to be sold to the highest bidder. When a home does not get sold, it goes back to the bank which has the mortgage on the property. It then becomes a real estate owned property.
The REO selling process
When a bank takes ownership of a home, the mortgage balance no longer exist on the property and the bank will start to do what is necessary to sale the home. The bank will handle the eviction process, if someone still lives in the home. It may even do small repairs and handle the up keep of the lawn. The bank will pay any outstanding homeowner association dues, and negotiate any tax liens.
How are REO homes sold?
Each bank or mortgage company does things differently when it comes to selling bank owned properties. However, they all have one common goal, and that is to get the highest price for the property.
Banks are not in the business of selling bank owned properties for cheap. They are looking to recoup some of their losses from the property. So, when a person presents an offer to purchase a REO property, the bank will more than likely present a higher counter offer.
Condition of the property
When a bank is attempting to sell a bank owned property, it is not looking to do a lot of repairs. Therefore, most banks sell the property in an “as is” condition. When a bank attempts to sell a REO property, tit is looking for the buyer to obtain any necessary inspections at his own expense, because banks are not trying to put a lot of money into properties that they have already taken a loss on.