REO-Real Estate Owned
A Real Estate Owned property (REO) is a property that has reverted to the mortgage lender after an unsuccessful foreclosure auction. Most REO homes are sold “as is” so it's important to do “due diligence.”
A home inspection is a must. "As is" means exactly what is says, what you see is what you are buying. Basically the seller isn't planning any work to fix up, clean, or repair any damages that exist. “As is” properties can be unlivable or can be a “move in” ready home. Understand the true nature of the REO property under consideration.
Consider the costs for renovation and/or repair and the time required to complete them. Budget appropriately and realistically to understand the full price of buying an REO property.
Know the local real estate market to understand if the reo price is a deal or not. It is important that the comparables are done properly. Coffee Real Estate agents understand how to get correct comparables to fully understand the price-value decision. Contact Coffee Real Estate and talk to an agent to get a fuller appreciation of how to judge if the REO price is a good value for the buyer.
REO properties can move quickly. Therefore it is important to be financially ready. Cash buyers must have the funds ready in an account they can prove funds are available. If a mortgage is needed, a pre-approval letter must be ready to be written by the lender or mortgage broker immediately. No offer will be accepted by REO companies without a clear understanding how the property will be financed.
REO transactions can take more time and paperwork from the offer all the way to close of escrow. After the offer is submitted, there is a wait for a response of acceptance or a counteroffer. Since a REO property is owned by an organization, it may have to go to a committee or a department that handles the REO negotiations. This can take a while to get all of the paperwork processed. REO transactions can be a hurry up, then wait process.
REO properties are an important way to find a home or investment property. Work with a professional real estate company to help navigate the process and some of the frustrations can be understood and avoided. Coffee Real Estate has a team of professionals to guide the REO buyer through the process.