A class of property owned by an investor, such as the government, the bank or an agency, after an unfortunate sale at a foreclosure auction is known as Real Estate Owned. These properties are owned by a bank or financial institution.
Advantages of working with REOs include:
- The properties are free from liens/encumbrances. The banks completely remove unwanted records attached to the property; hence no reclaim can be done. The unwanted records attached may include taxes, second & third mortgages or mechanic’s liens.
- REOs/Bank owned properties are always vacant because once the bank owns the property, they evict the previous owners, which saves the buyer’s money, time and the hardships of the eviction process. The properties are well maintained; hence they are safe and good for new owners. Financiers can save an incredible amount of time and energy because the dislodgment process has been taken care of by the bank.
- Lower market prices and payments with low-interest rates is another advantage of working with bank owned properties. The banks usually don’t sell the properties at the market price since they have the need of selling to compensate their loss and removing property from their books.
There is a great deal of competition involved when buying bank owned properties. Working with REOs attracts more customers, but involves less risk because the properties are free from any liens; therefore, it’s easier for the investor to weigh their options and negotiate.
Unlike properties at foreclosure auctions, REOs can be inspected prior to making offers and are listed with real estate agents. While many foreclosures are often in deplorable condition, REOs are typically restored to at least a readily salable condition by the lending institution. The bank or lending institution that owns the property will often offer financing with better deals than they would offer on traditional properties.
REOs are an awesome win, win for everyone involved.