How do Banks sell their Foreclosed or REO
Properties?
When the property is not sold in the auction at the
court step, as described in the article
foreclosure Process,
it goes back to the Bank. After that point the
property will be known as
REO
(Real
Estate
Owned
- by the bank). Based on some historical data and
observations, only about 3%-5% of all scheduled
auctioned properties are sold to the audiences at
the court step of the Counties (e.g., in Collin
County of Texas). This means, more than 95% of those
properties go back to their respective lenders or
banks.
Please note that this article explains REO
Foreclosure (after the bank repossesses the
property) Selling Process. For Foreclosure Selling
Process at court steps in Texas, please visit
http://www.TexasFiveStarRealty.com/Foreclosure_Conduct_of_Sale_in_Texas.asp
For the most up-to-date
foreclosure listing (REOs) in North Texas free
please visit
http://www.texasfivestarrealty.com/List_of_Foreclosures.asp
Process of Selling REO Foreclosed Properties
1.
Assignment of the REO Properties:
After banks repossess the property, they assign it
to one of
their preferred Real Estate Broker or asset manager
in the area that meets their requirements and
criteria.
2.
Getting Appraisal:
Bank then orders an appraisal and/or BPO (Broker
Price Opinion) to determine how much the property
worth in that local market. Bank also gets a list of
issues or problems and a list of required items to
be fixed or replaced.
3.
Evaluation and Preparation of the Property:
Bank then evaluates the condition of the house and
decides which items (if any) to fix or replace and
comes up with the bottom line price for the house to
be sold.
4.
Selling the REO Property:
Then, the property will be listed in MLS and/or
other sources and medias, by their authorized
licensed real estate broker or asset manager, to be
sold in the market.
What are the differences
between an REO foreclosure Selling Process and a
Regular Selling Process?
In most parts, the
process of offering, counter-offering, negotiations
will be the same as regular (non-foreclosure) sales.
However, there are many lender’s specific
requirements that are different than regular sales
requirements and must be followed.
For example; Banks may
require:
·
Pre-approval or pre-qualification
letter from a specific lender,
·
To use their own forms and addendums
in addition or replacement of the standard forms,
·
To use their preferred Title company,
·
No Seller Disclosure Notice is given.
Therefore, the buyer doesn’t have access to the
previous history of the things that had happened to
the house,
·
Property is usually sold “AS IS” with
no repairs,
·
Bank usually takes longer time than
regular sale to respond. They usually hold an offer
for several days to receive more offers (multi-Offer
Situation) before making decision,
·
To submit offers online through their
websites,
·
No Option Period and No Option Fee,
·
Utilities may not be turned on. Some
banks may have the utilities turned on for the
inspection purposes and some may not turn them on
all.
·
Exact amount pre-defined by the bank
or exact percentage of the purchase price for
Earnest money (e.g., exactly 1% of the purchase or
Offer Price)
·
Owner Occupancy Certificate may be
required
·
etc.
For detail list of Buyer’s
Consequences and differences between an REO
foreclosure contract and a regular sale contract and
things that purchaser should know and understand
before signing the REO foreclosure contract see
http://www.TexasFiveSTarRealty.com/Foreclosure_REO_Watch_List.asp
(TBA).
For the most up-to-date list of
foreclosures (REOs) in North Texas, please visit
http://www.texasfivestarrealty.com/List_of_Foreclosures.asp
List of Foreclosure (REO) Properties in North Texas
For the most up-to-date list of foreclosures (REOs) in North Texas, please visit
http://www.texasfivestarrealty.com/List_of_Foreclosures.asp
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