After foreclosure auction and no bids were accepted, the property becomes that of the bank and referred to as Real Estate Owned or Bank REO.
Now may be a great time to buy bank owned properties. These are real estate properties that the banks have foreclosed on and are losing money on. A property that a bank holds is referred to as a bank R.E.O.
Banks incur expenses in holding the properties and they would prefer selling these properties as quickly as possible to help them prevent future losses.
Banks are not in the business of selling properties. But due to the increasing number of foreclosure, banks want to be able to quickly sell the properties.
Banks are willing to give the property below the current market value just to help them from incurring additional expenses in keeping these properties.
Some of the risks involved with buying at a foreclosure auction can be avoided by waiting until after the auction to make an offer. Homes that don’t sell at these auctions become classified as REO’s, or Real Estate Owned. This means that the title has returned to the lender, and it is solely the bank that you will have to negotiate the purchase with.
REO’s are sold on “As Is” condition. All repair expenses will be shouldered by the buyer so it’s advisable to inspect the property before giving your final offer. You need to assess the cost of repair and use it to back up your offer to the bank.
It’s safe to buy an REO. You are able to check the property before buying it and decide if your offer and bank’s offer is enough to cover all the additional expenses for the repair of the property.
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