What are the Advantages of Buying Repossessed Homes?
When lenders repossess homes they need to sell them quickly at auction – or through other means – in order to reclaim the money they lost by the delinquent loan. For most first-time homebuyers and investors, repossessed homes that have been foreclosed upon by the lender offer many opportunities.
Frequently, lenders have hundreds – and sometimes thousands – of repossessed homes they are seeking to sell at discounted prices. Repo properties are great deals because they can be bought at or below market value. Lenders want to get their money back quickly and they often reduce the asking price significantly.
Advantages to Buying Bank REO Properties
- All liens against the property are removed once it becomes an REO, and taxes are paid.
- Unlike properties at foreclosure auction, REOs can be inspected prior to contract, and are listed with real estate agents.
- While many foreclosures are often in deplorable condition, REOs are typically restored to at least a readily salable condition by the lending bank.
- The bank or lending institution that owns the property will often offer financing with better deals than they would offer on traditional properties.
- The bank or lender that owns the property will often provide an allowance for certain repairs.
- REO properties are usually listed on your local multiple service, or can be located by going directly to your REO bank’s website. Your Buyer’s agent will search the MLS for you and should have access to additional REO properties not on the MLS.
- REOs will often times include appliances.
- While in hot markets you may not see a difference in price between an REO and a typical property, during slower markets you can pick up an REO at discounts to the property’s actual value.
Note that lenders and banks do not like holding REOs on the books, and try to get rid of them as quickly as possible.