REO stands for “Real Estate Owned” and is synonymous with bank owned or lenderowned. The ‘dictionary’ definition is: Property acquired by lenders through foreclosures or deeds in lieu of foreclosure. A property becomes an REO after the bank is unsuccessful in selling it at a foreclosure auction.
A number of events must take place for a home to become an REO property. The first 90 day clock begins with the homeowner missing their first loan payment. At the end of the first 90 days, if the homeowner has not caught up on the payments or made arrangements with the bank, the notice of Trustee’s sale is publicized and the second 90 day clock begins. Again, the homeowner has 90 days to get caught up on their payments or make other arrangements such as short selling their home. At the end of the second 90 days, the Trustee’s saletakes place at the courthouse. At this time, the public has the opportunity to bid on the property. If the property has no bidders, it goes back to the bank and becomes Real Estate Owned.
Buying a foreclosure property can be a hassle. But, if you play your cards right, you could sign a purchase agreement at tens of thousands less than the home’s market value. However, keep in mind that few foreclosures are turn-key. Some of these properties are only in need of a few coats of paint. In many cases, they need extensive repair due to owners that were neglectful or sometimes spiteful because of the eviction. Some of these issues may not be easily detected and may quickly diminish the prospect of “built-in” equity. Foreclosures, pre-foreclosures, and short sales are not always a good deal with a pot of gold at the end of the rainbow. No matter what condition the property was in at the time of purchase, the new sales price is now a comparable for any future appraisals of property in that neighborhood.
Once your offer is accepted, you are entitled to have a professional property inspection. Some Realtors tell their clients that this is unnecessary, however, this is a crucial step because these properties are typically sold as-is. The professional inspector may be able to find problems that are not readily apparent and knowing about these issues ahead of time could save you tens of thousands of dollars.
Who do you know that may be facing the difficult and unfortunate process of a short sale or foreclosure, or is interested in purchasing one of these properties? Be sure to have them contact My Arizona Home Team for answers to all their questions regarding bank owned properties or short sales. Having experience with REOs and short sales and established relationships with banks can make a major difference in a successful transaction. Now is time to work with the professionals who are active in the business. Please give any member of My Arizona Home Team a call today to discuss the details.
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