Bank Owned properties or R.E.O (real estated owned by a corporate entity) sales are much easier than a
short sale. The only problem with a reo is the conditions of the transaction. In most cases the bank will
sell the property in as-is condition. Depending on the kind of financing you have in place, some lenders
will not close the escrow if the home is not habitable. In the case of the price, the price is usually set low
to attract a lot of attention. We have come up with the conclusion that on average it takes 22 showings to
generate 1 offer on a property. By setting the price below market value, the reo usually will receive
multiple offers depending on the condition and location. Thus driving the price closer to market value.
Some drawbacks with reo's is the fact that you have no history on the home you are aquiring as compared
to a normal sale where a homeowner will disclose material facts about the home. Banks are waived the
obligation of completing a transfer disclosure statement. The home comes with no warranties and you
might not receive concessions on some reos, such as closing costs, termite repair, or any other requests
you may have. Banks are also asking for less time on contingencies. You might only get 9 days to
appraise and inspect the home you are interested in. Do keep in mind that the few things that you miss
out on by buying an reo are compensated for with price.