Bank Owned Properties

Bank Owned Properties

Bank Owned Properties or more commonly referred to as REOs’ – Real Estate Owned – as defined by Wikipedia, are a class of properties owned by a lender – typically a bank, government agency or government insurer after an unsuccessful sale at a foreclosure auction/Sheriff Sale.  A foreclosing beneficiary/Bank will typically set the opening bid at a foreclosure auction for at least the outstanding loan amount.  If there are no bidders that are interested, then the beneficiary/Bank will legally repossess the property.  This is commonly the case where the amount owed on the home is higher than the current market value of the foreclosure property, such as with a high loan-to-value mortgage following a real estate bubble.  As soon as the beneficiary/Bank repossesses the property it is listed on their books as REO and categorized as an asset.

After repossession the beneficiary/Bank will go through the process of selling the property on their own or through the services of an approved REO real estate broker or other sources.  The beneficiary/Bank will remove the liens and other debts on the home

Edward Kent, Broker Owner of Olde Towne Real Estate is an approved REO Broker for Bank of America;  In addition he holds the Platinum Agent Certification in REO – Bank Owned Properties – and Short Sales through Equator Financial Services, a Nationwide Foreclosed Home Listing Service.

Bank REO properties are generally in poor condition and need repairs and maintenance, both to satisfy property upkeep laws and to preserve and prepare the property for sale.  REO properties are sold without any warranties or representations pertaining to any aspect of the property.  Typically the buyer is responsible for any and all repairs, including meeting municipal code approvals.  The buyer of an REO must be pre qualified by the lending institution who is selling the property, or if a cash buyer, show proof of funds through bank statements.  When a buyer makes an offer on a REO property to the beneficiary/Bank the response time is usually within three (3) days, and settlement can be as soon as thirty (30) days.

What is the Benefits to a Buyer when Purchasing a Bank Owned Property?

Bank Owned Properties are priced aggressively to sell as quickly as possible.  The REO property is evaluated by an approved REO Realtor and appraised at current market value.  There is no emotional interplay between a normal seller and buyer.  This is an asset to the Bank and they want to dispose of it as rapidly as possible at a fair price which reflects property condition and the market environment.  A Buyer willing to undertake the work usually associated with a Bank Owned Property normally makes a sound investment decision!