REO properties (Real Estate Owned by the Lender) can be a great bargain for buyers. These sales are also referred to as Bank-owned Sales. They are properties where the lender has taken possession with the intention of selling the home.
There are some risks associated with purchasing an REO home. Banks/lenders are not required to provide a property disclosure on these properties which means that the buyer is not advised of any issues the home may have such as leaks, termites, water damage, etc. Unfortunately, these homes have often been vandalized and items such as wiring, piping and appliances may be missing. They often require plenty of TLC before the new owner is able to occupy the property; therefore, having an experienced agent to guide you through the appropriate inspections is invaluable.
If the previous owner financed the home through a government-backed loan, then they are responsible for selling the home. Government-backed loans are those backed by the Department of Housing and Urban Development (HUD) or the Department of Veteran’s Affairs (VA). HUD homes are sold via public auctions and bids must be submitted by an agent authorized to sell HUD homes in that area. Homes sold by Fannie Mae and Freddie Mac fall into this category as well.
If you are interested in purchasing an REO home, please contact me. I would be happy to review your needs and work with you throughout the process.