REO and Foreclosures: Part II

By
Real Estate Agent with Your Family Realty llc

We determined in part one that a foreclosure is prior and included the sheriffs sale and time of redemption.  An REO is when the bank owns the property free and clear and markets it through a Realtor.

Which is better to purchase?  A foreclosure or an REO?

First, when buying a foreclosure or an REO one need not assume that anything is necessarily wrong with the house save that the previous owner failed to pay their monthly payment.  However, because of the hurt and pain of that process some people will strip a property of appliances and other valuable items.

Second, when buying a foreclosure at a sheriffs sale it is possible that the home may still be occupied and that the owners may still have right of redemption depending on which state you live in.  When you by an REO Realtor marketed property, the bank will have handled the eviction process and own the property free and clear before they put it on the market.

Third, when you buy a foreclosure at a sheriffs sale you are expected to have a cashiers check on hand for the amount of your bid.  You then receive title to the property including any liabilities still attached to the property such as liens or back taxes.  When you buy a Realtor listed REO, the home buying process is much like a normal purchase in that you offer a minimal amount or earnest money on the property and bring the rest at closing (usually in 30 days).  In addition, liens and back taxes are the problem of the bank since they became the new owner who had to settle those liabilities.

Both REOs and foreclosures are sold as is without contingencies, however the far more popular method (according to statistics) of buying properties are as an REO because the liabilities, condition of the home, and title to land is much more certain than with a foreclosure.

REO appears to be the best way to go.

Here are some additional reasons:

An REO can sometimes be bought up to 20% below market value.

The simplicity of the process handled entirely by skilled Realtors on your behalf.

The right to have a home inspection and seek recourse from lender.

Tax and Lien Free

Less Risk

Possibilities of negotiating financing or incentives with REO bank.

Coming up, part 3, the state of the REO market.

Comments (5)

Christina Williams. REALTOR® TN property search & local insights
First Realty Company - Crossville, TN
Thanks for the information Ron.  You are so right about the hurt and pain that some former owners strip the property clean... I've seen this myself. That for the info on REO
Nov 11, 2007 11:44 PM
Gordon Sloan
Group1 Real Estate, selling houses in Salt Lake City Utah - Salt Lake City, UT
Salt Lake Homes For Sale, Salt Lake Real Estate

Ron.. Thanks for the primer. It reminds me that sometimes we begin to use a catch all term for the various distress designations, ie: short sale, REO, foreclosure, third party transaction, H.U.D. home, Repo. etc.

For sure our buyer would be confused as well as other agents.

 

Nov 11, 2007 11:47 PM
Juan Valdez
Priority Bail - Perth Amboy, NJ

Good Stuff! would you like the oppurtunity to swap links?

if so email me at info@yourfamilyhomeloans.com tell me a little about your website and I will give you more Info about my offerings... Thanks!

Nov 12, 2007 12:01 AM
Anonymous
Joe Vasquez

Excellent information regarding REO's.  Any comments on a website that I can visit regarding management and sale of Real Estate Owned properties?  I sold hundreds of properties for a financial institution a few years ago.  Looking to get back into the business.

I

 

Dec 07, 2007 08:22 AM
#4
Mike Norvell Sr
Morris Williams Realty - Leesburg, FL
Norvell Consulting Group
Ron...I agree 100000 % I spent qute some time working in preforclosure, with a lot of grief involved. Reo properties are already title clean,a nd you but it and get going.. NO Playing with the carryover tennents (previous owners who wont leave) no tilte issues, no liens....NO comparison...Unless there is a very super reason to buy pre foreclosure, wait and get it all clean later...
Dec 07, 2007 10:10 AM