Entries categorized as ‘REO’

To Extend or Not to Extend?

October 9, 2009 · 1 Comment

By: Judy Price

Estimates place the overall number of new homes purchased with the first-time home buyer tax credit at 1.2 Million, with 400,000 homes bought by those who would have never done so in the first place. With the credit set to expire on November 30th, the debate about its extension now goes all the way to Capitol Hill.

This week, Congress did vote to extend the 8K tax credit for the next year to servicemen and women who actively served overseas for three of the last twelve months. This bill now moves on to the President. What remains to be seen if the extension will apply to all first-time buyers or beyond that to all home purchasers.

The market data continues to show signs of hope. On September 29th, the most recent Case-Shiller indices reported that the data from July showed house prices in the United States increasing for the third month in a row. And the August Pending Homes Sales Index posted its seventh consecutive monthly gain in August, the highest reading in 2-1/2 years. In my previous post,  I expressed concern over unemployment’s effect on recovery. Almost 10% of our population is more concerned about finding a job over purchasing a home. It sounds as if we’re stuck in a catch-22. Since housing is such a large part of our economy, it would make sense to continue to provide ways to stabilize it. But if the unemployed cannot qualify for a loan, they won’t have an opportunity to take advantage of the tax credit, resulting in a prolonged recovery in the housing market.

Interest rates remain low, and for those who can make the move, it remains a great time to buy. Would an extension of the tax credit result in another 400,000 new purchases that could boost the economy? I say we should give it a try. As bipartisan support for the extension gains momentum in Congress, it is possible that six-twelve more months of the tax credit may be on the horizon.

Categories: Bank Owned · FHA financing · First-time homebuyer · REO · Real Estate · Sales and Marketing
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Debunking Top Myths about REO Properties

September 10, 2009 · Leave a Comment

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!

Categories: Bank Owned · REO · Real Estate · Uncategorized
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Advantages to Buying an REO Property

August 30, 2009 · Leave a Comment

We’re currently experiencing a buyer’s real estate market and REO homes are top targets for many homebuyers. REO homes – or homes that are being sold by the original bank lender, as opposed to the homeowner – are a great way to get a bargain for owner-occupied residences or investment properties.

There are many advantages to purchasing an REO property:

 - Banks are in the banking business, not the real estate selling business, so they’re often anxious to get them off their books. Therefore, REO homes are often listed – and sold – below market value, which allows buyers to purchase much more home for the money.

 - And many banks may be more likely to finance a home they own, as they have an interest in unloading the home in order to eliminate the costs associated with owning the home.

 - The process actually isn’t that different than purchasing a home via the traditional home buying route. Align yourself with a knowledgeable real estate professional to help you determine how much home you can afford, analyze market value of the home you are interested in purchasing and prepare your offer. Once you submit that offer, you will still have the opportunity have the home inspected so you can come to the closing table feeling confident about your purchase.

 - Many REO homes are brand new construction single-family homes in beautiful communities or modern high-rise condominiums with the latest technology and in-demand features. 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.

Categories: Bank Owned · REO · Real Estate · Uncategorized
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How Does the REO purchase process work?

August 27, 2009 · Leave a Comment

“How the does REO purchase process work?’  that’s a question we’re asked quite often at Coldwell Banker NRT Development Advisors.  Though the process may seem daunting at first, it’s really not that different from the traditional home purchase process.  And the payoff can be big.

REO stands for “real estate owned.”  When a buyer cannot keep mortgage payments current and therefore a bank takes over as owner of the property, the property is considered REO.

Following are the five main steps to purchasing an REO property.

Step 1:  Get your financing in order.  When considering an offer for an REO property, banks will look at many factors in addition to the asking price – including pre-approved financing, substantial downpayments  and credit history.  Consult with your tax or financial advisor in advance to assess your financial situation and determine your target price range.

Step 2: Make an offer.  While banks are often motivated to sell REO, they’re not going to just give homes away.  When you find the ideal REO home for you, come prepared with a realistic offer in order to be taken seriously as a buyer.  A buyer’s agent can help you put together an acceptable offer that takes into consideration current market condition and comps, meets the requirements of the lender, and still offers you – the buyer- real savings.  Make sure your offer includes an inspection and appraisal contingency that allows you to withdraw should the inspection reveal major problems.

Step 3: Make the most of the escrow period.  Just like traditional real estate transactions, buyers have the right to back out of the contract within the contractual time if they find something wrong with the home, so make sure that you know what that time frame is.

REO properties rarely come with a seller’s disclosure, as the actual seller is now the bank, which hasn’t lived at the property to know the day-to-day conditions.  Therefore, it’s wise to have an inspection done.  If you find something wrong, most REO contracts will include a right to cancel and receive your deposit back within a set period of time, which is often 10 days.

But due to the current economy, REO properties run the gamut of conditions.  So many of the REO properties on the market now are new construction homes that don’t carry any baggage of past owners.

Step 4: Be prepared for the waiting period, and possible a counter offer.  Buyers must recognize that they are dealing with a large group of people and not just one seller; therefore buyers need to be patient throughout the REO purchase process.  It may take as few as 7 days or as much as two months before you hear back from the bank.  The listing agent should be able to provide insight about how long the process will take with the individual bank.  Ofter, banks will counter the bid, in effort to receive a higher offer to cover their costs and also show investors that they’re attempting to get the highest price for the property.

Step 5: Get ready for a quick closing.  Once an offer is accepted, the bank may need four to five days business days to obtain final approval.  But once the offer is approved, the closing process will move quickly.  Many banks will ask for a closing within 10 to 30 days, and then it’s home sweet home!

Categories: Bank Owned · REO
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