REO Misconceptions

Many buyers believe that REO transactions are simple. Because the bank or financial institution owns properties it doesn’t want to hold, the properties are priced for immediate sale. Without an understanding of what repairs to the property are required to bring it up to an attractive resale level, the inexperienced buyer has more risks. It takes an experienced agent to help recognize some of the pitfalls a buyer can fall into.

Enthusiastic Buyer

Sometimes, the buyer can be blinded by the possibility of a property. Buying real estate is an emotional process. If a property looks attractive, or it is in an attractive location, the buyer might be tempted to bid regardless of the problems the home might have.

The bank agrees to sell the home to the buyer. And if the buyer has cash on hand, the bank is even more eager to close the deal.

Unfortunately, the buyer soon learns from neighbors that the home had been rebuilt. An appraisal would help to identify some of these issues, but the buyer would be locked into the sales process and facing a fee to back out.

Multiple Bidders

If there are multiple bidders for a bank-owned property, the bank will typically give all involved a chance to counter bid. This usually means the buyer has to bid your maximum amount in an attempt to close the deal. If the buyer is unfamiliar with the comparables in the area, this can lead to overpayment.

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By: Kuba Jewgieniew is a real estate expert, and CEO of Realty ONE Group. As a former stock broker and computer programmer, Jewgieniew applies a data-driven approach to real estate transactions.