REO property refers to real estate owned by banks. It can consist of residential homes, commercial real estate, or undeveloped land. Buyers' present purchase offers through real estate agents just as with any other type of transaction. The only difference is banks own the property instead of a private owner.
REO property can be a good choice for everyone from first time home buyers to seasoned real estate investors. These properties are typically priced below market value and sold with a clear title. All are sold 'as is' and the majority is in need of some degree of repair.
There are a few differences between buying bank foreclosures vs properties listed by private sellers. Bank owned homes are usually in worse condition, but not always. Many have sat vacant for long periods of time, leaving them musty, dirty, and in need of a lot of TLC. Some have been vandalized or used as refuge by squatters.
On the flip side, REO property also includes multi-million dollar properties and houses situated in highly desirable communities. One thing is certain. No one has been immune from the foreclosure crisis. However, banks tend to hold onto more expensive properties in hope of recouping their losses when the real estate market rebounds.
There are a few ways to maximize savings on REO properties. The first is to look at houses offered through Fannie Mae loan mortgage programs. Another is to spend time learning about Neighborhood Stabilization Program grants offered through the Department of Housing and Urban Development (HUD).
Fannie Mae Homepath properties include all types of residential homes including single- and multi-family residences, townhouses, condo units, and manufactured and mobile homes. Most of the properties are located in the suburbs or metropolitan cities, but there are also properties offered in rural areas.
People that buy Fannie Mae homes can apply for financing through Home Path Mortgage. This program is ideal for first time home buyers and buyers with blemished credit. It can also be beneficial to real estate investors.
Qualified applicants can benefit from lower down payment requirements, along with special incentives such as no mortgage insurance. Fannie Mae Homepath supports public financing assistance programs including HUD's NSP grants.
Another advantage of financing Fannie Mae REO property through Homepath is this program offers additional funds when houses require a higher level of repair. Buyers can apply for Homepath Renovation Mortgage that provides funds for the purchase price and required renovation.
Homepath offers up to 35 percent of the completed value, but no more than an additional $35,000. This financing option is available to both owner occupants and real estate investors.
One consideration of presenting offers on real estate owned property is banks hardly ever consider offers for less than the asking price. In fact, it's not uncommon for buyers to pay more than the asking price. This is because multiple buyers often compete for the same property. It's important to determine the highest offer you're willing to make and prepare to walk away if that offer is not accepted.
To maximize savings it is imperative to become educated about the process of buying REO property and available home buying programs. Our REO property article library offers detailed information and helpful resources about Fannie Mae loans and first time home buyer programs, as well as discussions about the advantages and disadvantages of buying foreclosed realty.
Published on December 28, 2011 at 03:46 AM
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