With mortgage interest rates at record lows and single-family home affordability at an all-time high, there has never been a better time to buy. In the wake of the recent housing crisis, it’s increasingly common for prospective homebuyers to consider buying a real estate owned (REO) home – one that has gone through the foreclosure process and is owned by a bank or other institution. While the process for buying an REO is a lot like buying any other home, it’s important to understand what you should know before you buy.
What is an REO or bank-owned home?
As a prospective homebuyer, it’s more than likely that you are hearing about, or seeing, homes for sale that are referred to as “Foreclosures” "REO" or "bank-owned." Essentially, these properties are one and the same. They are homes that 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.
What should I know about buying an REO home?
- Know your market. You may be able to find a "deal" when buying an REO home, but 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. Rely on your real estate agent for guidance. ( I will tell you that the market is heating up like crazy. The last bank owned home I made an offer on (last week) had 11 offers on it ! Competition is stiff.
- 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 that 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 First Look® Initiative gives owner-occupant homebuyers the ability to purchase a HomeSteps home during its initial 15 days of listing (30 days in Nevada) before investors may make offers. Search bank owned homes here.
What is the buying process for REO homes?
The buying process for REO homes is not much different than any other home. There are typically additional addendums and disclosures for REO homes, and your real estate agent will walk you through each of them.
- Get approved, or at least pre-approved. This is a critical step in any real estate transaction to help you determine how much home you can afford and show sellers that you’re a serious buyer.
- Reach out to a licensed rea estate professional and begin house hunting! You should consider a qualified real estate professional who has a proven track record in all types of transactions, including short sales and REOs. HomeSteps® works with a network of real estate agents from all over the country, many of whom are familiar with your local community.
- Contact Mr Williamsburg ( a bank owned specialist)
- Make an offer. Your real estate professional can work with you to determine a price that you believe is fair.
Don’t forget the home inspection!
Because REO homes are sold “as-is,” you should always have a home inspection to ensure you are financially prepared for any maintenance costs.
- Wait for approval. Your offer or counter offer, if applicable, will likely need to be reviewed and approved by several people and/or companies. Response times vary by bank or institution.
- Move forward with closing Once the offer is finalized, you will move forward just as you would with any real estate transaction.
Resources for Bank-owned Homes in Williamsburg or Hampton Roads VA
Search Foreclosures For Sale
You can search foreclosed , bank-owned homes/ REO in all of Hampton Roads VA with the links below. No registration required. FREE