Reo Auction Services – Understanding How it Works
If you are hearing about the term REO for the first time then do not get confused. It is just the abbreviation for Real Estate Owned property. Simply put forward it refers to those properties that have been subjected to a process of repossession. If you thought that, the lender because of a default from the borrower’s part initiates this, then you are quite right. What makes these properties different from the usual one is that the lender forecloses them all. However, there were no profitable bids in the foreclosure auction or there is a chance that prices were too high.
REOs are highly sought by those who seek to have ROI transparency. Hence, it is highly coveted by the firms that are in the business of home reselling. It is highly unlikely that the foreclosed properties will be under the ownership of lender banks, even if they do they will be desperate to get them disposed at the soonest. Therefore, if you are having experience in REO market you will notice that there are many lender banks who are offering lucrative deals on REO property, like incentives on special deals, allowance for repairs, buyer-friendly financing terms.
You will be amazed to know that some banks sell these at 30 percent REO liquidation of the actual value that may include appliances too. It will be wrong to interpret that foreclosure auctions are a sure shot way of selling REO properties. Investors are becoming smarter by the day. To make things more inclined in their favor the wily ones give a fig to foreclosure auctions. This may compel the bank to become more lenient and offer bigger incentives. This approach is quite prevalent among house brokers dealing with REOs.
Buying properties though REO auction can prove to be helpful in comparison to traditional methods because there is the provision of inspecting the property prior to its sale. Since you get the chance to make a purchase decision after examining the property you can draw a proper estimate of the net cost of restoring the property in a state that is safe and congenial for human occupation. This is where REOs tend to score high in comparison to standard foreclosure auctions.
Mortgages hanging over properties that have been defaulted by borrower often prove menacing for house brokers. With REOs one gets relief from these hassles. As they come with clear titles and free from liens it is quite right to keep expectations smooth going from a future perspective. With occupants out of the way and monetary settlements like Taxes cleared it is a more convenient way to get hold of desirable properties.
These days some lender banks have dedicated REO asset management department to handle the associated marketing aspect. This is why REO auction services are transcending the concept of conventional trading service providing banks the opportunity to display their REOs for a public offering. Transparency is a big deal in the REO market and listing the REOs of banks in the Multiple Listing Service is a courageous virtue.