By: Amber Cooley
REO homes – or bank-owned homes – continue to be in demand for homebuyers searching for a great deal. Many potential homebuyers may have misperceptions when it comes to the process involved in buying an REO home, negotiation power, financing and more. Having spent a lot of time marketing REO properties and working with agents on the sales of these homes, I’d like to explore some of the common myths of buying a foreclosed home and why these perceptions are not necessarily true.
Myth #1: You cannot have an inspection done on REO properties.
Reality: You absolutely can and should have an inspection on an REO property that you’re interested in buying. Just like with a traditional home purchase, you want to go to the closing table feeling confident because you understand the condition of the home you’re purchasing.
Myth #2: REO properties may come with liens.
Reality: When closing on an REO property, you will leave with a clear title with no liens. In fact, a homebuyer couldn’t close on a home purchase if there were existing liens.
Myth #3: You don’t have negotiating power when dealing with a bank.
Reality: In fact, banks will negotiate closing costs, condo dues, home warranties, appliances and more. Work with your real estate agent to put together an appropriate offer that takes into consideration current market condition and comps, meets the requirements of the lender, and still offers you real savings.
Myth #4: REO properties need lots of repairs.
Reality: Actually, many REO homes are brand-new construction single-family homes in new communities or modern high-rises. So they’re the same homes that many buyers are looking for, only they’re on the market for only a fraction of their original values. In fact all of the REO homes listed with Coldwell Banker NRT Development Advisors are brand new homes where any kind of repairs or other construction needs have been already handled.
Myth #5: Buying an REO property is complicated.
Reality: With the help of a real estate professional who is familiar with the REO process, buying a bank owned home is actually very similar than the traditional real estate transaction. Interested buyers can expect quick turnaround times from banks once an offer on a home has been submitted. In some cases, they will hear within 24 hours of an offer being submitted.
There are some incredible REO deals in the market right now. What a perfect time for someone to buy given drastic price reductions, superior product inventory, financing options, first-time homebuyer tax credits and more! Definitely keep an open mind when considering a new construction REO property – you will be pleasantly surprised by the opportunities out there!





