Real estate owned or REO is a class of property owned by a lender—typically a bank, government agency, or government loan insurer—after an unsuccessful sale at a foreclosure auction. This is commonly the case when the amount owed on the home is higher than the current market value of the foreclosure property. There are many challenges to navigate when looking to buy an REO. The DAN Group can help you overcome these challenges.
- First and most important is to find an agent who is knowledgeable and experienced in handling sales of lender owned properties. You should also retain an attorney who has short sale and REO expertise as they will need to know how to navigate thru the layers of contacts to get to the right party.
- The next step is the mortgage pre-approval. Getting the approval before you get started will make it easier when you find a home. It also guides us in what your comfort zone is on a monthly basis. In REOs, you will need to include it in your offer.
- Be prepared to provide a personal check for $1,000 for the earnest money or deposit. This is a usual and customary amount. The check will be made to your attorney or to Striker Realty.
- If you are going to making a cash offer, you will need to provide proof of funds. This is accomplished by providing copies of current statements showing where the money is deposited. For your security, please black out your account numbers and social security number.
Making an offer…
- All offers are written. There are two conditions that have to be written into the contract. One is the house is being bought in “as is” condition and the other is the buyer is responsible for all town inspections and town required repairs.
- You may also have to sign a Fannie Mae Real Estate Purchase Addendum and/or an Owner Occupant Certification. This is a declaration that you intend to occupy the property or you are an investor.
- Once your paperwork is completed, we will submit the offer packet to the lender along with a copy of you deposit, a pre-approval and/or proof of funds thru the listing agent.
- It usually takes two to four business days for the Lending Institution to respond. As with any offer, we will hear if it was accepted, rejected, or countered. If there are multiple offers, the lender will come back to everyone and ask for the highest and best offer.
Once your offer is accepted…
- You will need to contact the attorney and retain them. They will conduct attorney review on your behalf.
- Once out of attorney review, you will proceed with the home inspection. This inspection is for informational purposes. REO houses are bought “as is”. If there is a major environmental or structural issue you can withdraw from the contract.
- Usually, your second deposit will be due 10 days after the attorney review.
- You then proceed as if it was a regular sale. However, be prepared for the entire process to take many months to complete. The entire process moves at the lender’s pace.