The term REO has become more and more commonplace over the last couple of years. It is an acronym for Real Estate Owned and means a property that has been taken back by a bank or similar institution either through a mortgage foreclosure proceeding or a deed in lieu of foreclosure. In this first article on this subject, I plan on going through the basics of how a bank reacts to and deals with a foreclosure at least from my observations as a real estate broker who has listed short sales and REO properties and who has represented buyers in purchasing these properties as well.
(Photo of bank REO home we listed in Apopka.)
When a seller first stops making their payments on a property, after a few months the bank will contact a BPO company to send out "spies" a/k/a real estate agents to do drive by inspections of the property. These real estate agents will typically do an exterior inspection in an attempt to verify occupancy and property condition. They will also take anywhere from 1 to 4 photos of the property. Often they will also complete a BPO which stands for Broker's Price Opinion. This is basically an informal appraisal to determine the property's current value. Sometimes in addition to these activities the bank will also have the real estate agent knock on the door and attempt to make contact with the home owner to see if they are open to speaking with the bank to do some sort of workout arrangement, loan modification, deed in lieu, short sale, etc.
Occasionally the property is actually vacant or abandoned and if it is, the bank will send out a property preservation company to secure the property, change the locks, and basically take possession for the bank. Many property owners are quite surprised to learn that the lender can do this, but just pull out a standard Fannie Mae / Freddie Mac mortgage document and read Paragraph #9. This Paragraph gives the lender very broad rights to re-take possession of the property even if a foreclosure has not been concluded or even commenced. That being said, if you do own a property in foreclosure or if you are an investor or real estate agent, please make it obviously clear to anyone that the property is not abandoned. I would go so far as to put a sign in the front window of the property that says you are managing or still occupying the property and to please call you at 407-xxx-xxxx. I would also recommend putting your lockbox on some place other than the front doorknob. Otherwise you just might end up getting locked out of your own home and your lockbox thrown into the trash never to be seen again.
Hopefully this article has given you a little insight into the foreclosure process. I will continue more on this subject in a future article. Until then, if you are interested in buying a bank owned REO home, short sale, or any other property in Central Florida please contact me so we can help you get that great deal.
Rob Arnold - Your full service and investor friendly Realtor ® in Orlando and Central Florida.
ABR, CPL, CRB, CSP, GRI, Managing real estate broker, Notary Public
We sell foreclosures, short sales, and bank owned REO properties throughout Central Florida. We sell and list Central Florida real estate and Orlando real estate. Free list of foreclosure and short sale houses available.
I also provide flat fee MLS listings, For Sale By Owner, and menu-based services in most parts of Central & South Florida, the Space Coast, and the Treasure Coast including Orlando, Winter Park, Maitland, Ocoee, Winter Garden, Apopka, Altamonte Springs, Casselberry, Longwood, Winter Springs, Oviedo, Lake Mary, Sanford, Deltona, Debary, Deland, Mount Dora, Eustis, Clermont, Kissimmee, Winter Haven, Lakeland, Tampa, Sarasota, Bradenton, Miami-Dade, Fort Lauderdale, West Palm Beach, Port Saint Lucie, Melbourne, Daytona Beach, Ocala, Gainesville, Palatka, Jacksonville, Volusia, Brevard, and more.
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