If you’re looking to buy a home, you’ll likely come across homes for sale referred to as "REO" or "bank-owned." What are these properties and should you consider looking at them?
Essentially, REO and bank-owned properties are one and the same and are most prevalent in regions hardest hit by the housing crisis, such as Arizona, California, Florida and Nevada. These homes have been through the entire foreclosure process and are now owned by the lender. This means that the seller is the bank or an institution such as Freddie Mac vs. another homeowner.
You should absolutely consider buying an REO property if it fits your key buying criteria, such as location, size and price. However, it's important that you educate yourself before diving in.
Four Important Tips about Buying REOs
- Know your market. It's more important than ever that your offer price is comparable with other homes in the neighborhood. Most banks and institutions can and will negotiate. However, the goal is to sell the home at or near current fair market value and multiple offers are on the rise. Rely on your real estate agent for guidance.
- Budget appropriately. Most REO homes are sold "as is," so you'll need to consider the costs for renovation and/or repair and the time required to complete them. Most banks and institutions make necessary repairs and properly maintain the home after the foreclosure, but you may want to make some as well.
- Inspect the home. Be sure to have the home inspected. This is an important step for any real estate transaction, but even more so for REO homes since they may have been vacant for a period of time.
- Be ready. As with any real estate transaction, if you are a serious buyer and approved for financing, you need to be able to act quickly. If you see a home you'd like to buy, the sooner you can make the offer the better. Many investors are interested in REO homes and they are often able to move fast.
Freddie Mac's REO properties are managed through HomeSteps®, our real estate sales unit. HomeSteps offers a variety of desirable and affordable homes throughout the country and is definitely worth a look.
To find a listing of REO homes for sale in your desired neighborhood, visit HomeSteps.com today.
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