SOUTH FLORIDA FORECLOSURES
What is REO?
Real estate owned or REO is a term used in the United States to describe a class of property owned by a lender—typically a bank, government agency, or government loan insurer—after an unsuccessful sale at a foreclosure auction. A foreclosing beneficiary will typically set the opening bid at a foreclosure auction for at least the outstanding loan amount. If there are no bidders that are interested, then the beneficiary will legally repossess the property.
Advantages of Buying a Bank-Owned Property
1. No Homeowners: Deal Directly With the Bank
When you buy bank-owned property, you only deal with the bank. Some home buyers may prefer to not deal with homeowners. REO properties often are vacant, so home buyers don’t have to deal with tenants reluctant to leave, troubled homeowners or former owners threatening legal action.
Plus, the bank has no emotional attachment to the home, which means you don’t have to deal with a seller reluctant to negotiate for sentimental reasons.
2. No Outstanding Taxes
Did the last homeowners stop paying their property taxes? That shouldn’t be a problem.
To entice buyers, the bank should waive any outstanding real estate property taxes due on the property. However, be on the safe side and do a title search.
3. Option for a Home Inspection
Unlike properties sold at foreclosure auctions, you can request to see and inspect bank-owned properties before you close on a deal. And you absolutely should.
REOs are typically distressed homes, and the former owners are not likely to have kept the place up to date or even move-in ready. Serious work may need to be done.
4. Discounted Prices
Probably the biggest reason that people first get interested in bank-owned properties is because of their below market value prices. But that doesn’t mean you are necessarily going to get a steal.
Homes that require too much repair work can quickly become just as expensive as—or even more expensive than—move-in ready, homeowner-sold properties. They’re not all diamonds in the rough.
Compare the bank’s asking price with other comparable homes in the area and be sure to get a thorough inspection.
Consider Professional Help to Buy a Bank-Owned Property
Bank-owned property negotiations usually go through an experienced REALTOR®, which means you will have a professional who specializes in foreclosures on hand to guide you through the process.