Bank Owned Properties
What is a Foreclosure and Why would I buy one?
Foreclosure is actually a process banks use to reclaim a property when an owner has defaulted (or stopped making payments on their home loan). In Arizona, the banks use a process called a trustee sale (a specific type of auction ) in which anyone is welcome to bid on that property. If no bid is accepted or if the bank out-bids all other bidders, then the property goes back to the bank, meaning, the bank owns the property. Now this piece of real estate is officially a bank-owned property. This is where the acronym “REO ” comes from: Real Estate Owned.
Even though these words don’t all mean the same thing, we often use them or hear them used interchangeably. No matter what you call it: REO, bank-owned, foreclosure, etc..an REO can be an excellent purchase for investor’s , second home buyer’s, seasoned buyer’s or even first time home buyer because the banks goal is to get rid of this property as quickly as possible at a fair price! In fact some banks even have community initiatives driving their motto to HELP people own their own home.
Presidential Realty is a leading expert selling hundreds of bank-owned properties every year; Let us dispel some myths and see if buying a bank-owned property can be right for you:
Myth 1: Buying a bank-owned property takes too long (takes as long as a short sale )
Truth: Although banks sometimes reserve a 72 hour response time, REO’s still generally close within the same time frames as non-REO properties. Cash deals can even close in as little as 2 weeks.
Myth 2: Buying a bank-owned property means I’ll have hidden (or not-so hidden) damages and repairs that will just cost me more money in the end
Truth: Not all REO’s have been destroyed! Even though REO’s are sold in “AS-IS” condition, banks will still grant an inspection period so that the buyer has time to have a professional look at any and all aspects of the property. It is always recommended to get a home inspection. After the buyer reviews any inspection reports, they can still ask the bank to make repairs or cancel the contract. Any seller, even a bank, has the right to agree to the requested repairs or disagree.
Myth 3: Buying a bank-owned property is too risky
Truth: Bank-owned properties are sold on the open retail market so that by the time they are marketed to the public, the bank has already taken care of the risky issues such as back taxes, eviction, securing the property, liens, even some repairs, etc. In addition, many banks still negotiate and agree to the same types of terms that a buyer can get with any other NON-REO property for example seller paid buyer closing costs or a seller paid home warranty.
How can I take advantage of a foreclosure opportunity? Let us do the work for you!