Snag Your Dream Home for Less: The REO Shopper’s Guide to Buying Houses Straight from the Bank

Who wouldn’t jump at the opportunity to buy their dream house at a thousand dollar discount? Turns out, the real estate market has a back door to just that — an off-label use for Real Estate Owned (REO) properties. Here’s how to buy a house using an REO listing.

Understanding the Goldmine of REO Properties

What Exactly Are REO Properties?

REO properties are a monument to dreams deferred, homes that have been seized back by lenders or the government after the former occupants couldn’t keep up with their mortgage payments. This category includes the entire spectrum of housing units, from small single-family homes to large commercial properties, all waiting for a second chance.

The Allure of REO Properties: Why So Cheap?

REO properties are considered steals, but there are usually reasons why. Here’s why.

  • Desire for a Rapid Sale: They don’t make money off of real estate, they make money by lending yours. They lose by holding property, so they want to get rid of it quickly and cheaply.
  • Repair Costs: Many might be scarred by years of neglect, needing a buyer with the desire to rehabilitate.
  • No Emotional Ownership: The lender — who, unlike a seller who is usually parting with a cherished home, has no emotional investment in this property — prices properties openly and dispassionately, based on simple return on investment.

Unearthening REO Listings: Your Treasure Map

Digital Gold Mines: Online Real Estate Platforms

The most comprehensive listings of all the REO properties are a mere click away. Filters on Zillow and take you directly to said jewels.

Direct from the Source: Bank and Government Websites

Banks and government agencies, owners of much REO, list them on their websites, a direct portal to an investment.

The Insider Track: Real Estate Agents

If you focus on REO properties, many realtors have access to listings that will never go on the open market, giving you an insider’s edge.

Mastering the Art of THE MOVE in Acquiring an REO Property

Exercise Due Diligence: Inspect Vigorously

A good deal has a way of making us look over things we might otherwise want to look at closely. Make sure you have inspections done that will expose any disease the house has been keeping hidden.

Know Your Market: Research Is Key

And learn what the house is really worth on the market so that you don’t end up overpaying for it – the list price is just a starting place for negotiations.

Flex Your Negotiation Muscle

REOs, unlike inherited homes or foreclosures, do not carry a set price and terms. Because their lenders will be more motivated to get the sale done sooner rather than later, you are in a strong position to negotiate the price with them.

Partner with Experience: The Role of an Agent

The REO purchase process is complicated and nuanced. An agent experienced in the process can be a valuable asset.

Conclusion: Unlocking the Door to Affordable Homeownership

REO listings act as a secret entrance into homeownership that can save you thousands of dollars. It’s a nuanced game of knowing what you want, how to get it, and how to score it without stepping on toes – a way to go from wannabe homeowner to proud property owner without hitting the red zone of your bank account. With the right know-how, you can be the envy of your friends, gain a newfound respect in the neighbourhood and drop some serious knowledge on your parents (who thought homeownership was impossible for you). Here’s how.

May 30, 2024
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