How to buy an REO, foreclosure or bank property?

REO simply stands for real estate ownership. Many people loosely use the terms REO, bank ownership, and foreclosure as one. I would like to clarify and illuminate the REO buying process. When a borrower defaults on a mortgage payment, the current lender initiates legal action to take possession of the delinquent property. This is usually done by foreclosure through the existing court system. A borrower can also voluntarily return the property to a lender and this is known as a deed-in-lieu of foreclosure. Whether by court or voluntary release, once the property has been repossessed from the defaulting borrower, it becomes the real property of the foreclosure lender. This is then a repossessed bank owned REO property.

To buy an REO, a buyer can start on the Internet. The best place to find bank owned properties is to visit the common banks website. Try a Google search for Wells Fargo REO, Bank of America REO properties, or HSBC REO. Usually you will find a list of properties that can be searched. They will most likely direct you to an REO agent. Most lenders use competent real estate agents to assist them in the marketing and sale of their properties. The best thing to do if you want to buy a bank-owned home is to find the top REO listing agents in your area. The agent will help you find the right home for your needs.

The first step in finding any home is to get prequalified through a mortgage lender. If you are a cash buyer, you can skip this step, but be prepared to provide proof of funds to purchase a bank-owned home. Once you’re qualified, your agent can send you a list of homes. Drive on and narrow your selection down to a few properties. The REO agent will show, report and compare the selected properties. Once you decide on a property and make an offer, the process has just begun.

There are a few things that are different when you buy an REO:

Vendor Appendices

closing costs

per diem

Utilities and Inspection

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