How can I buy REOs?

The quickest and easiest way to purchase a bank owned REO is to contact your local REALTOR®. Each lending institution has different rules and requirements on how they sell REO properties. Most lending institutions prefer to work with real estate agents rather than deal directly with the consumer. Having an experienced REALTOR® who is knowledgeable about bank owned properties and familiar with REO policies and procedures is key. As a Certified Foreclosure REO Specialist, I understand the intricate details involved in the listing and sale of bank owned properties.


What are the Advantages of buying REOs?

For homebuyers and investors, bank owned REOs offer opportunities that are not available in the pre-foreclosure and auction phase of the foreclosure process.

  • Bank owned properties are usually sold at below market prices with less money out of pocket due to lender incentives and closing cost credits. Lending institutions will typically pay title insurance for settlement with an approved closing agent.
  • Bank owned properties are usually clear of any liens that may have been recorded against the property. Before lenders make REO properties available for sale, they typically expunge all liens or claims against the property. Any cloud on title — a second or third mortgage, mechanics liens, taxes or any other liens attached by creditors — are often wiped out.
  • Bank owned properties are usually vacant because the banks have evicted the previous owner, saving the homebuyer time, money and stress associated with purchasing a pre-foreclosure or short sale property.

What are the Disadvantages of buying REOs?

While there are definite benefits associated with purchasing a bank owned REO property, there are also significant drawbacks.

  • Bank owned properties are often in poor condition - holes in walls, missing appliances, broken doors and windows - with evidence of damage or long-term neglect.
  • Bank owned properties entail a lot of paperwork. Purchase contracts have numerous addendums with specific deadlines. Time periods for inspection and financing are shortened. Pier diem fees may apply for failure to close on time.
  • Bank owned properties are competitive in nature. Because REOs are aggressively priced, multiple offer situations often exist. The order in which offers are negotiated has NO relevance to the order in which they are received. Offers are evaluated based on the terms and conditions, not the date of receipt.
  • Bank owned properties have no disclosures as to the history or condition of the house. Although inspections are permitted, the bank will usually not agree to repairs nor allow the homebuyer or investor to make repairs prior to closing. Bank owned REOs are purchased "as-is". What you see is what you get.