PROPERTY ALERTS
PRE-FORECLOSURES QUESTIONS AND ANSWERS - FAQs
BackHow do I buy bank-owned REO properties?
Overview
The lender/bank has taken ownership of the property, either through an agreement with the
owner during pre-foreclosure or at the public auction. The lender usually sells the
property to recover the unpaid loan amount. The lender typically clears the title for
any buyer, but the potential bargain is often less than a pre-foreclosure or
auction property.
Contact Lender
You should contact the lender directly and ask for the REO or asset management department
to find out how you can view and make an offer on the property. REO means "Real Estate
Owned" by the lender. It's another way to say the property has already gone through the
foreclosure process and has now been repossessed by the foreclosing lender.
Make Offer
Although the lender usually clears out any liens on the title, you should still make any
purchase offer contingent on a title search. Also, find out if the lender has made any
repairs to the property or if it is being sold "as is." The lender wants to recover any
money they've put into the property, but you can often make a successful offer that's
still substantially under the market value.
There is no set timeframe within which the banks must sell their REOs; however, banks often
want to get REOs off their books rapidly. As a result, many REOs sell quickly. The only
exception is if there is a "redemption period" for the owner to buy back the property
after it is repossessed by the bank. State law dictates if there is any redemption period.
The bank will typically wait until the end of any redemption period to sell the property.
Keep in mind that sometimes contacting the lender can be frustrating, as the main purpose of
a lender is to loan money, not to sell property. So even though the bank may have a
department that handles bank-owned property for sale, that department may be hard to
track down.