Understanding the REO Client
When buying properties that have been foreclosed also referred to as REOs, it is important to remember that the seller is a financial institution, not a homeowner. The bank has no emotional attachment to the property. Furthermore, the banks do not have detailed knowledge of all aspects of the property and its history. The bank obtains as much information as possible about the current condition of the property when determining a list price, but many other details and nuances are largely unknown.
For the bank, when a property goes into foreclosure it is almost always going to be a loss. There are numerous expenditures associated with the foreclosure process that go beyond just the missed mortgage payments as well as the expenses associated with holding a property in REO inventory. Financial Institutions are not in the property management business and the longer a home remains a part of their inventory the longer it will be before their investment is recovered. This is the main reason the banks have such an involved process in place to decide what the list price of a property will be. The bank utilizes its approved brokers in order to determine a competitive fair market value for each REO asset in its inventory.
Because the nature of the seller is different, the process of purchasing an REO is slightly different as well. At the beginning of the process it is still important that each buyer finds a home they feel is a “good fit”. The change comes in after the offer process begins.
Offers are presented to the bank through a secure website that is available only to the bank and to their approved brokers. The offer must be completed to the banks’ specifications and include proof of funds or pre-qualification from a reputable lending institution before it will even be considered for review by the bank. Once the offer is received by the banks’ internal system response times can vary from a few hours up to sometimes in excess of a week depending on the necessary levels of approvals.
It is important to understand that we are frequently not communicating with an individual, but rather submitting data to a website. We receive most updates through that system since it helps keep things organized and the process automated. Once an offer is in the banks’ systems, it is out of our hands and left to the math and terms.
Island Advantage Realty
Island Advantage Realty, LLC has established itself as an innovator and leader in the REO market throughout Metropolitan New York and Long Island. With 20 years of experience handling foreclosed and residential properties, you can rely on our knowledgeable team of agents to assist you with all of your Real Estate needs. Trust the experts. Trust Island Advantage.
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