These are Places that are taken on by a Bank inventory after a foreclosure. These are properties that have been acquired by financial institutions when a house owner does not make mortgage payments. Then are sold at discount prices by these establishments, or below market prices or below the current market prices for the existing homes. Several people in New Mexico have seen these type of Albuquerque foreclosures.
A Bank Owned Property is one where the lender takes back properties during foreclosures. Banks or lenders bid in a foreclosure and the one with the highest bid gains the rights to obtain the property. Bank Owners usually have low-interest rates and low down payments. These resources often are found on online services or through large lending institutions called Loss Mitigations departments that usually sell these properties.
Understanding Real Estate Short Sale.
When a bank decides it sells the property, usually termed as a real estate short sale. Is where the sale of the place or residence, generates less that the market value of the house. Restate short sales occur when the owner and Bank decide to sell the property, and absorb a moderate loss and sometimes is an alternative to a foreclosure.
The difference between a foreclosed Property and Bank Owned Property.
As you buy a property during a foreclosure sale, you might have to pay at least the loan balance plus any interest, including any other bonus fees amassed during the foreclosure process of the house. And also be prepared to pay in cash most of the times, so, in the end, the money spent to get the whole property is usually a lot.
As REO is a more attractive and tidy option to getting a property, the lender owns it and will see the elimination of tax liens as well as the eviction of the occupants where the need arises, as the buyer waits for the title insurance policy.
The following are things that you as a purchaser who is interested in REO properties should know before making an offer.
- As the Bank puts the on the market, it will have to make any major repairs to damages or any issues that make the house unsaleable of even unlivable. Because of it put in mind that the bank is now the Seller of the property and thus motivated with interest to make the room as saleable and liveable as possible for the new homeowner, but also minimize the cost as possible.
- Most banks tend to get professions who specialize in foreclosures, short sales and REO like a real estate agent or company so as to make a less of a loss as possible. Different house buyers usually get their agent to represent them in the negotiation process or work directly with the REO agent.
- Usually, the buyers have the option to go and inspect the residence or property before they make an offer for the REO, just as you would with a private homeowner or any other good you purchase.
- Always try to get pre-qualified or pre-approved advice before shopping or making an offer for the property, so as to understand what it takes to get the property or even make an offer you cannot hope to pay. So if you have an eye on an REO property, always get pre-approved by the Bank or Owner that owns it may give you an advantage.
- Most of the times once a bank acquires the residence or property becomes bank owned. The property is sold at a competitive market price to get it sold as quick as possible and won’t usually allow bargaining unless the residence has stayed on the market for quite some time.
- Usually, before making an offer after approval, compare the prices of different home online and find the floor and ceiling for REO properties so as not to make offers above what you cannot afford.
- Remember that with an REO property the more it sits in without being sold or without anyone making suggestions for the place. The bank is losing a lot of money on maintenance costs, so do not be afraid to make low bids for the properties and you might get yourself a house at a bargain price.
- Banks usually have a lot of people to answer to and different boards and committees such as shareholder, so they will attempt to sell an REO at competitive market price. So they will always make counter offers to any offer made. So the price is always negotiable and if you get your mortgage from the same bank their other aspects of the deal that can adjust in your favor like interest rates and closing costs.
- Most REO and Foreclosures need to have extensive repairs done to them When you make an offer, have a company or person inspect the property so as to get a good understanding of all the repairs that need should do to the place and the precisely required price of the repairs
- When trying to make repairs ask for a licensed contractor for quotes on any needed repairs, then include this costs as an addendum to the contract following the inspection. This I very useful thing to do when you inspect the house and before the initial bid for the house is made.
- Do not think that because the bank has put the house on sale the price of the property priced correctly. So before making your bids get an independent appraisal to determine the value of the house just like when you’re buying jewelry. Later the price given to from the assessment will determine how much you will offer regarding your mortgage to the bank.
- Always hire an independent company of to conduct research on the house and make sure that everything regarding taxes and debts is fine. As Most banks clear the title before putting an REO on the market.
- When you make an offer for a REOs, it takes longer for offers to be respond too as they have to evaluate the potential buyer of the house. So be patient, and the bank will always get back to you.