Finding a REO (Real Estate Owned) or “Bank Owned Home”

Real-Estate Owned (REO), or “bank-owned,” properties for sale are increasingly common – especially in regions that were hardest hit by the housing crisis. As you embark on your home shopping journey, it’s important that you understand what these types of properties are and key points to keep in mind before you buy. Foreclosed homes  are homes that are for sale that are referred to as “REO” or “bank owned.” Essentially, these properties are one and the same. They are homes that have been through the entire foreclosure process and are now owned by the lender.


 Buying a Bank Owned / REO

Anyone can buy a bank owned home. The challenge for real estate investors is to reach the person who can make the decision to sell the bank-owned REO property. Each lending institution has different rules and requirements on how they sell bank-owned REO properties which can be very confusing to a potential investor. The best choice would be to work closely with an experienced real estate agent who knows how to contact the lender and find out what they require to purchase an REO property.

What are the advantages to buying a Bank Owned Home?

One of the primary advantages of buying a bank-owned REO property is that investors are purchasing a property without liens or other encumbrances. Before lenders make bank owned homes available for sale, they typically go through a lengthy process to remove all liens or claims against the property. Any cloud on the title — a second or third mortgage, mechanics liens, taxes or any other liens attached by creditors — are done away with. Moreover, skilled investment real estate consultants can negotiate with the lender’s loss mitigation department to discount the price to a fraction of its market value. Besides negotiating price, many buyers of bank owned homes also negotiate favorable lending terms below existing market rates as many of the bank owned homes portfolio lenders offer great financing terms to those who would purchase their bank owned homes.
For real estate investors and primary home buyers, bank owned homes offer opportunities that are not available in the pre-foreclosure otherwise known as short sale and auction phase of the foreclosure process. Buying bank-owned real estate offers the distressed home buyer many advantages:

  • Bank owned homes are usually sold at below-market prices with great terms like low down payments and low interest rate financing.
  • Buying bank owned homes involves lower risk and competition.
  • Foreclosed bank owned homes  are typically clear of any liens that may have been recorded against the property.
  • Since the seller of bank owned homes is also the lending institution, you can  have your real estate agent and consultant negotiate with the bank to have them pay for all or some of the closing costs.
  • Bank owned homes most often are vacant because the banks have evicted the previous owner, saving the investor or home buyer time, money and the frustration of being involved in the eviction process.


Know your market

You may be able to find a “deal” when buying an Bank Owned Home, but it’s more important than ever that your offer price is comparable with other recently sold homes in the neighborhood. Most banks and lending institutions can and will negotiate; however, the goal is to sell the home at or near current fair market value. It is a must to rely on your real estate agent for guidance.

Interested in connecting with an experienced investment specialist real estate consultant? Contact Brian Young PLLC today…You will be glad you did.

Brian Young PLLC REALTOR® | Arizona Homes and Land Specialist


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