REO (Real Estate Owned)
If the attempt to sell the property via a short sale (pre-foreclosure) or foreclosure did not lead to the desired result, the property falls back to the bank. The bank is now trying to place the property on the market itself as a "Bank Owned Property" or "REO". The buyer carries a lower risk, since the property can now be viewed and inspected prior to making a decision. The banks maintain their own departments for the sale of REO properties. The aim of the clerks is the successful sale of the property at the current market price. The bank's employees must represent their sales price before the bank's shareholders.
As a buyer, always work together with specialists, as the bidding process does not usually work face to face. Successful brokers never offer this service for free, since the procedure can take a long time, similar to the short sale procedure. However, the fees invested often pay off and considerably reduce the buyer's risk.
The processing Buyer's Agent usually fills in your bid (offer) in an online form. The bank usually reacts with a counter offer. Even if the bank accepts your first bid or your counter-bid to their counter-offer, the wording "... subject to corporate approval within 5 days" is usually used. Banks typically want to sell as is (as seen). Always make your offer dependent on the result of a home inspection (at your expense). If the expert opinion notes corresponding deficiencies (this is the rule), you should request the bank to assume or partially assume the repair costs.
The condition of the properties on offer is not always intoxicating, as the banks are naturally reluctant to make further investments. If the condition and purchase price are in a reasonable relationship, an REO can become a lucrative affair, as the object of purchase of one of our customers proves.
Condition at purchase
Condition after renovation
Most banks prefer to be paid in cash and are more willing to negotiate in these cases. Make sure that you qualify as a solvent bidder at the bank with the help of the appropriate documents ready with your bid. REO business is also conducted by groups of investors who can buy several properties in a package and negotiate correspondingly low prices. These buyers usually work closely with specialized banks or generate capital from private equities. Hedge funds have also been increasingly active in this area.