"REO" stands for Real Estate Owned. These are houses which have gone through foreclosure and are presently held by the bank or mortgage company. This is not the same as a property up for foreclosure auction. 
If you buy a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees added during the foreclosure process. You must also be ready to pay with cash in hand. And on top of all that, you'll get the property 100% as is. That possibly could include current liens and even current residents that need to be thrown out.
A bank-owned property, on the contrary, is a much cleaner and attractive proposition. The REO property was unable to find a buyer during foreclosure auction. The bank now owns it. The lender will handle 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 normal disclosure requirements. For example, in California, banks are exempt from giving a Transfer Disclosure Statement, a document that normally requires sellers to make known any defects of which they are knowledgeable. By hiring Graci Real Estate and Appraisal Service, L.L.C., you can rest assured knowing all parties are fulfilling LA, USA state disclosure requirements.
Am I guaranteed a low price when purchasing an REO property?
It is occasionally thought that any foreclosure must be a bargain and a possibility for easy money. This isn't always true. You have to be very careful about buying a REO if your intent is profit from the sale. While it's true that the bank is typically anxious to offload it promptly, they are also motivated to minimize any losses.
Look closely at the listing and sales prices of similar homes in the neighborhood when considering the purchase of an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in. It is possible to find REOs with money-making potential, and many people do very well buying and selling foreclosures. However there are also many REOs that are not good buys and may lose money.
All set to make an offer?
Most lenders have staff dedicated to REO that you'll work with while buying REO property from them. Normally the REO department will use a listing agent to get their REO properties listed on the local MLS.
Prior to making your offer, with Graci Real Estate and Appraisal Service, L.L.C. representing you, they will contact either the listing agent or REO department at the bank and find out as much as they can about what they know regarding the condition of the property and what their process is for receiving offers. Since banks typically sell REO properties "as is", it may be in your best interest to include an inspection contingency in your offer that gives you time to check for unknown damage and withdraw the offer if you find it. As with making any offer on real estate, your offer may be more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
Once you've submitted your offer, the bank may make a counter offer. Then it will be your decision whether to accept their counter, or make another counter offer. Be aware, you'll be working with a process that generally involves multiple people at the bank, and they don't work evenings or weekends. It's not uncommon for the process of offers and counter offers to take days or even weeks. Graci Real Estate and Appraisal Service, L.L.C. is accustomed to these situations and will work to ensure there are no undue delays.
Questions? Please give us a call - we would love to work with you!!!
