What is REO

What is REO

An REO (Real Estate Owned) is a property that goes back to the mortgage company after an unsuccessful foreclosure auction. You see, most foreclosure auctions do not even result in bids. After all, if there was enough equity in the property to satisfy the loan, the owner would have probably sold the property and paid off the bank. That is why the property ends up at a foreclosure or trustee sale.

REO Properties For Sale

The bank now owns the property and the mortgage loan no longer exists. The bank will handle the eviction, if necessary, and may do some repairs. They will negotiate with the IRS for removal of tax liens and pay off any homeowner’s association dues. As a purchaser of an REO property, the buyer will receive a title insurance policy and the opportunity to investigate the property.
Make sure that the price you pay (if you’re successful) is comparable to other homes in the neighborhood.

How Banks Sell REO's

Each bank/lender works a little differently, but they all have similar goals. They want to get the best price possible and have no interest in "dumping" real estate cheaply. Generally, banks have an entire department set up to manage their REO inventory.
Once you make an offer to purchase, banks generally present a "counter-offer." It may be at a higher price than you expect, but they have to demonstrate to investors, shareholders and auditors that they attempted to get the highest price possible. You should plan to counter the counter-offer.
Your offer or counter-offer will probably have to be reviewed and approved by several individuals and companies. Even once an offer is accepted, the bank may insert wording like “..subject to corporate approval with 5 days."

Property Condition

Banks always want to sell a property in "as is" condition. Most will provide a Section 1 pest certification, but not unless you include it in your offer and negotiate the point. They will allow you to get all the inspections you want (at your expense), but they may not agree to do any repairs.
Your offer should include an inspection contingency period that allows you to terminate the sale if the inspections reveal unanticipated damages that the bank will not correct.
Even though you agreed to “as is," always give the bank another opportunity to make repairs or give you a credit after you’ve completed your inspections. Sometimes they’ll re-negotiate to save the transaction instead of putting the property back on the market, but don’t take it for granted.
Banks do not want to see a lot of proprietary disclosures; they are exempt from the California Seller’s Transfer Disclosure Statement (TDS-14). If there are real estate agents involved, either representing you or the bank, those agents are required to provide you their disclosure statements.
Most banks will not provide financing on their REOs but it doesn’t hurt to ask. Especially if the property has extensive damage and you are purchasing it "as is."

Making an Offer

Offers are usually FAXED to the bank. The listing agent needs your originals. There is no formal presentation. Keep in mind: nothing happens evenings and weekends (banks are closed)
Since there is no face-to-face presentation to the bank, provide the listing agent with a pre-qualification or better yet, a pre-approval letter and buyer biography. Make your offer easy to accept.

Home sales up 64 percent last year in Las Vegas

Home sales up 64 percent last year in Las Vegas

By Brian Wargo

The Southern Nevada housing market showed signs of recovery in 2009 by recording the second-highest number of home sales in the region’s history.
The 46,879 sales of single-family homes, condos and townhomes through the Multiple Listing Service was 64 percent higher than the 28,618 in 2008, according to statistics released this morning by the Greater Las Vegas Association of Realtors.
“It is a good sign, but it is just a number and doesn’t reflect the whole picture of what needs to happen,” said Dennis Smith, president of Home Builders Research and Southern Nevada housing analyst.

The number of sales in 2009 was second to the 71,963 in 2004 when investors started to flood the market to flip homes.
No one is saying that’s the case this time with demand driven by first-time homebuyers taking advantage of lower prices and an $8,000 tax credit, and investors who have a long-term focus of making income from rentals.
The rebound in home sales in 2009 is quite a contrast to 2009 when only 18,555 units were sold in Southern Nevada. The GLVAR statistics include Las Vegas, Pahrump, Mesquite and Laughlin and are primarily comprised of existing homes, which make up the bulk of the MLS.
“Anything that depletes the inventory is a good sign in my eyes,” Smith said. “It will just make things turn that much quicker. The sales have helped prices stabilize.”
In December, the GLVAR reported the 3,420 sales of existing homes was 10 percent higher than November and 37 percent higher than December 2008. The median price of homes sold, however, fell $4,000 or 3 nearly percent to $136,000.
The median price of condominiums and townhomes fell 4 percent to $65,300 even though sales rose 7 percent from November to 776. Those sales were up 71 percent from December 2008, the GLVAR reported.
New GLVAR President said the decade that just ended was a roller coaster ride for Las Vegas. He admitted it’s been a challenging time for the housing market and economy as a whole.
The GLVAR reported the percentage of homes bought with cash during December was 40.4 percent. About 60 percent of the homes sold in December were bank-owned but that percentage declined in the last half of 2009 because of a dwindling supply of inventory, officials said.
The GLVAR reported there were 19,707 homes listed at the end of December, a 5.5 percent decline from November and 11 percent below its mark in December 2008. Of that total, there were 8,405 units listed without offers.
As for the condo and townhome market, there were 4,576 units available at the end of December, down 4.4 percent from November. There were 1,819 units listed without offers.