Buying Bank Owned Properties (REO)
An REO (Real Estate Owned) is a property that goes back to the mortgage company after an unsuccessful foreclosure auction.
The bank now owns the property and the mortgage loan no longer exists. The bank will handle the eviction, if necessary, and may do some repairs. They will negotiate with the IRS for removal of tax liens and pay off any homeowner*s association dues. As a purchaser of an REO property, the buyer will receive a title insurance policy and the opportunity to investigate the property.
Advantages for a buyer include:
~Property may be obtained at discounted price due to banks urgency to clear their “books” of it
~Good likelihood of the bank contributing to the buyers closing costs.
Some disadvantages may be:
~ Property will likely be sold “as is” meaning bank will not do any needed repairs. Sometimes even repairs needed to satisfy buyers mortgage company
~ Bank will not provide any property history such as a Form 17 Property Disclosure.
