Real Estate Owned (REO) or Foreclosed Homes – Faithe Real Estate

What is an REO?

“REO” is Real Estate Owned. These are properties which have been foreclosed upon that the bank or mortgage company now owns. This is not the same as a property up for foreclosure auction.

When buying a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees accrued during the foreclosure process. The buyer must also be prepared to pay with cash in hand. Finally, you’ll get the property entirely as is. That might involve prevailing liens and even current occupants that may require eviction.

A bank-owned property, by contrast, is a much neater and attractive proposition. The REO property did not find a buyer during foreclosure auction. Now the bank owns it. The bank will attend to the removal of tax liens, evict occupants if needed and generally organize for the issuance of a title insurance policy to the buyer at closing.

Take notice that REOs may be exempt from typical disclosure requirements. For instance, in California, banks are exempt from giving a Transfer Disclosure Statement, a document that usually requires sellers to reveal any defects they are aware of. By utilizing me along with my firm Better Homes and Garden Real Estate | Go Realty, you can rest assured knowing all parties are fulfilling North Carolina state disclosure requirements.

Is REO property in North Carolina a bargain?

It is commonly presumed that any REO must be a bargain and an opportunity for easy money. This isn’t necessarily true. You have to be cautious about buying a REO if your intent is to make money off of it. Even though the bank is usually eager to sell it promptly, they are also looking to get as much as they can for it.

When considering what to pay for a foreclosure, carefully analyze comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale. The bargains with money making potential exist, and many people do very well buying foreclosures. However, there are also many REOs that are not good buys and not likely to turn a profit.

Prepared to make an offer?

Most lenders have staff dedicated to REO that you’ll work with in buying REO property from them. Typically the REO department will use a listing agent to get their REO properties listed on the local MLS.

Prior to making your offer, you’ll want to contact either the listing agent or REO department at the bank and find out as much as you can about what they know concerning the condition of the property and what their process is for accepting offers. Since banks typically sell REO properties “as is”, you’ll want to be sure and include an inspection contingency in your offer that gives you time to check for unknown damage and withdraw the offer if you find it. If, as a buyer, you can provide documentation proving your ability to pay, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This holds for any real estate offer.)

After you’ve presented your offer, it’s customary for the bank to make a counter offer. From there it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer. Be aware, you’ll be working with a process that usually involves multiple people at the bank, and they don’t work evenings or weekends. It’s not unusual for there to be days or even weeks of going back and forth. I am accustomed to these situations and will work to ensure there are no unnecessary delays.

Questions? I am standing by to answer any questions you may have. Feel free to use the form below!



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Robbie was such a pleasure to have as my realtor. He is always patient, kind, and helpful. I'm a first-time home-buyer, so there were a lot of things I needed to learn about and a lot of complicated documents to slog through. Robbie and his team guided me smoothly through the whole process. Robbie has a lot of experience in the Albuquerque real estate market and was able to give me good advice. He always responds to calls, texts, and emails right away, never keeps you waiting. Everyone on his team, from the people in his office to his fantastic loan officer to all the inspectors he lined up for me -- they were all top-notch, professional, and really pleasant to work with.
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Robbie Faithe and Jamie Cline were instrumental in our efforts to find and purchase our first home. Robbie helped strongly negotiate our position in a market that is frankly predatory and outright hostile to homebuyers, especially first-timers with little experience. He helped us move to a swift close while making sure everything was conducted soundly, promptly and with our interests at the forefront. He was supportive of us through the entire process, even after our first negotiations fell through, and was adamant about finding a house that we would truly want, not just the first home that met our loose criteria. Jamie Cline was vital in her role to assist us with booking appointments as well as keeping us apprised of all deadlines and offering advice when we desired. Overall, though this first-time homebuying experience was very stressful at times, Robbie and his team made sure there were as few impediments to the process as possible while making sure we were taken care of. I would definitely recommend their homebuying services and expertise.
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