by Scott Akerley
Recently I wrote in the blog about our vast experience with REO properties. Afterwards we got several questions about REO and what exactly the term means. For those who don't know, REO stands for Real Estate Owned. These are properties that fell into foreclosure and did not sell at auction, now they have returned to the bank or lender. Once they are in the possession of the lender, the lender will attempt to sell the property in order to recoup their original investment.
Buying REO property is very similar to purchasing a home in the traditional way, but there are some notable differences. Just like a typical home buying experience when you purchase REO property you are able to view the property and if you choose to you can make an offer on it. If the bank accepts your offer you will enter into an escrow agreement with the bank. This is where things get different.
With an REO there are very strict time constraints and deadlines built into the escrow agreement, and banks are absolutely immovable on those deadlines. Because they are an institution and not an individual, they are more than willing to charge hefty fines for failure to meet deadlines and to rescind the offer without returning earnest money if they feel that the terms of the escrow will not be met in a timely fashion.
People are purchasing REO properties in droves because they are saving between 10-30% on their purchase. It's a fantastic way to get into a first home or to buy investment property. However it is absolutely crucial to hire an escrow company with a track record like Glen Oaks Escrow, we process hundreds of REO properties every month. We have over ten years of experience handling REOs and are adept at meeting all of the built in timelines. Don't trust the closing of your home to a company who is learning the REO process, treat yourself to the best.