What to know when you’re buying a REO property…Most people, especially those that are in the market for buying a home, are familiar with the term “REO”. This stands for Real Estate Owned. That is, owned by the bank. A foreclosure.
It seems that if you’re out there trying to find your Dream Home that you’re basically trying to find your Dream Foreclosure. Depending on what city you live in, and even what neighborhood you’re searching in, sometimes the only choices you may have are to buy a REO. Such is the case in Stockton, CA.
Homes for sale that are occupied by the owner are either priced too high, because the owner owes too much on the mortgage and thinks they might be able to find that Home Buyer looking just for their home, or once they realize they can’t sell it for the higher price and need to sell at market value, they’ll have what is known as a Short Sale.
Short Sales are when a homeowner is selling their home for less than what they owe on it. They are “short” on their mortgage balance, thus the name Short Sale.
There are plenty of Short Sales out there too, and even more coming onto the market, but if your Realtor® doesn’t have any experience in working with Short Sales, then it could be a long and grueling process for everyone involved. There are a lot of buyers and agents that stay away from Short Sales altogether for this reason alone.
At least with a Short Sale over a REO, you have a seller that can disclose to you the necessary important facts about the property where the bank wouldn’t be able to do so with a REO since the bank has no personal knowledge about the home. Frankly, they’ve never lived in it.
There are many caveats to purchasing real estate and specifically bank-owned real estate, so the main thing to remember is to ALWAYS get a professional home inspection. Do this for any type of home purchase, but most definitely a REO. You don’t know what you’re buying, and the bank is exempt from filling out most disclosures that would protect you, the home-buyer.
With all of that said, there are a lot of really good deals to be found right now with purchasing real estate. Whether it be a REO, Short Sale, or even good ol’ fashioned traditional sale, just due your due diligence and pull in helpful resources of a Realtor®, a
good mortgage lender, and the services of a professional home inspector. The less headaches and stress you experience by doing everything on your own will be appreciated when all the dust settles.