If you are looking to buy a house, but can’t afford to spend top dollar by purchasing a traditional property, and don’t want to have to put in the thousands of dollars often required to fix up a home in foreclosure, there is another option: REO Properties.
REO property stands for real-estate-owned property. In layman’s terms, these houses have been through the foreclosure process, haven’t been bought at auction, and are now bank-owned and up for sale. There are many advantages to purchasing an REO property, as opposed to buying a house that is either brand new or like new. Here are a few of those advantages:
- In buying through the bank, you are able to purchase the property without title liens or other claims that often come with a home. Fewer strings attached means the process of purchasing the home is simplified.
- In buying a home from the bank, you know that it is vacant, which saves all parties involved a huge amount of time and effort, since there is no eviction process to undertake.
- Unlike homes that are in foreclosure, which are usually in poor condition and need a fair amount of fixing up, banks often restore an REO property to a condition that is readily salable. This saves you some effort in fix up costs, and you will still be able to sell the house for more than you purchased it, when you decide to relocate.
- You save money in your title search, when you choose to use the same title company that was used by the lender while the property was in foreclosure. Often, you will save as much as 100% on this step.
- Appliances are usually included with REO properties, unlike with many foreclosed properties.
- Since the bank owns the property and wants to get rid of it, they will often offer financing deals that are much better than those available on more traditional properties. Banks and other lending institutions don’t like having many REO homes under their ownership, so they tend to want to sell them as quickly as possible. This means, unlike with foreclosure properties, they put more work into them, before making them available, and you can often get better deals and more perks.
- When the real estate market is slower, REO properties tend to be highly discounted. If the market is hot, there isn’t a huge difference between REO homes and typical houses, so wait until the market is a bit slower.