FAQ’s – REO’s

What does an “REO” property mean?

REO stands for Real Estate Owned.  It is a term that banks use which reference their foreclosure properties.  When a property goes through a foreclosure process and there is no successful winning bidder, the property becomes owned by the bank.

How is an REO property different from a HUD property?

HUD properties are FHA-insured loan foreclosures which means that the government, not the bank, owns them.  These properties are labeled as “insured” or “uninsured”.  Insured properties are usually in good condition and FHA will insure a new loan for a borrower interested in the property.  Uninsured properties are typically properties that need repairs and the buyer will be responsible for these repairs.

Do foreclosure properties appear on the Multiple Listing Service (MLS)?

Yes, they are listed on an MLS just like any other property.  You may contact us to obtain REO listings in your area.

Does the amount which is owed on a property determine the bank’s asking price?

There are a number of factors which the banks take into consideration when deciding the asking price on an REO property.  Asset managers working for a bank will order appraisals and hire a real estate broker to advise them regarding the property’s condition and the value.  They then price the property accordingly.  The important factor to realize is that banks are in the business of lending money and not watching after houses.  They need to have the REO properties sold so the asking price is usually below the market value of the property.

What is the condition of REO properties?

Each REO property is unique and all properties come in varying conditions.  Although the majority of the properties need repairs, the properties are usually significantly discounted.  However, some houses are significantly discounted and do not need any repairs.  Prior to purchasing an REO property, it is strongly recommended to fully access the condition of the property and to perform your own due diligence.  This includes but is not limited to touring the property and comprehensively inspecting it to make sure that you are fully aware of any conditions and/or any physical defects.

Will the bank make repairs to the property once I purchase it?

The asset manager responsible for the property will discuss it with a real estate broker prior to placing the property on the market to determine whether this property is good for repair or for rehab.  The asset manager will then continue with a marketing plan and decide whether to sell it “as is” or “repaired”.  Typically, the “as is” properties are priced lower, and the asset managers do not make repairs to these properties.  The asset managers believe that since the price of the property is significantly reduced, that the bank should not be held responsible for any repairs.  If it is a HUD property, the properties are always sold “as is” with no repairs.

What are some of the guidelines for purchasing an REO property?

The majority of the properties that we list require a deposit of $10,000 and the properties are sold “as is”.  It is important to note that many REO properties are in need of repair because of the prior owner’s financial hardship before the foreclosure was completed.  Many of the REO properties will sell for all cash to real estate investors.  REO properties may also be purchased with FHA, VA, and conventional financing.  Once you express an interest in a particular property, we will assist you with obtaining financing, if needed.

How can I schedule a time to view a property that I am interested in?

You would simply contact us, tell us which property you are interested in, and we will schedule a time for you to view the property.  We would accompany you to each scheduled appointment.  We always tell everyone to visit the property and to fully inspect the property prior to making an offer.

Will the REO property have electric and water?

The majority of the properties will be winterized.  The water and power will usually be shut off temporarily.  Once you purchase the property, you will need to contact the proper municipalities and companies in order to request that the utilities be restored.  We can assist you with this.

Are there back taxes, liens or encumbrances attached to the property?

Since the properties have already gone through the foreclosure process, most liens and taxes that stay on the property are current, however, there may be delinquent taxes (if any), delinquent water bills (depending on the area) and housing code violations.  Your attorney handling the closing will obtain a title report and will provide you with the necessary information regarding liens, back taxes, etc.

What options do I have as an all cash buyer regarding title and deeds?

Most of the all cash buyers obtain title through a quit claim deed.  The other option is to obtain a special warranty deed or a limited warranty deed.  In that case, you will have to obtain title insurance through a 3rd party.  Please note that the title insurance will solely cover the cost of the property and it does not cover the cost of any improvements that are made to the property or any appreciation to the property.

What is a quit claim deed?

A quit claim deed essentially means that it transfers any rights that the current owner / grantor possesses in their property, however, it includes absolutely no guarantees that there exists a clear title.  Quit claim deeds will not guarantee that the title is clear of liens, such as tax liens, mortgage liens, mechanics liens, or there aren’t any other property owners listed on the title.  Any interest that the grantor has is what the grantee will receive.  Quit claim deeds are by far the easiest, quickest, and least expensive type of deed to use, and they require very little professional assistance.

What is a special or limited warranty deed?

A special warranty deed or a limited warranty deed is not as protective to the purchaser in comparison to a general warranty deed.  In simple terms, the grantor in a special warranty deed will convey the property with 2 warranties.  First, that they have received the title to the property.  Second, that the property has not been encumbered during their ownership.  The grantor of a special warranty deed will warrant the title only against their own omissions and/or defects.  They do not warrant anything pertaining to the title prior to their possession.

When do I receive my deed if I have a Land Contract?

The deed to the property remains with the lender until the loan is paid in full.  The deed gets transferred into the buyer’s name once all of the terms associated with the loan are satisfied.  The buyer generally has the option to pre-pay the balance of the loan to reduce the principal without any penalty.

Do you work with local real estate agents?

Yes!  In addition to listing all of our available REO properties on our website, we also list the properties with a network of real estate brokers in our local area.  If you are a broker and are interested in receiving our listings, please email us and include the following information so that we can add you to our database: Name; Company; Phone Number; Address; Email; Website; Counties Served.

Where are you located and what areas do you service?

Our company is located at P.O. Box 2126, Douglasville, GA 30133.  We only work with properties located within Atlanta.

Do I need an attorney’s assistance?

It’s never harmful to speak with an attorney regarding an REO, and often times, it may be the best thing you can do if you think that an attorney’s advice can help you. Although we aren’t a law firm and we cannot provide anyone with any legal advice, you are more than welcome to speak with an attorney that we use for our company. We truly want to get familiar with our clients, and help them in any way we can. Simply send an email to info@financefitnessgym.com and we’ll be sure to forward it.

Still need help?  If you have a question that isn’t answered here, or if you feel like you could use advice when it comes to an REO, we are here to help you make the best choice for you and your family.  You may call us at 833-FINANCE or email: info@financefitnessgym.com.  You’re also more than welcome to visit our office.  Evening and weekend appointments are available.

DISCLAIMER: Finance Fitness GYM is not a law firm and we cannot provide anyone with any legal advice.  None of our customer service representatives are lawyers and they also do not provide legal advice.  The information provided on this page is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or should be formed by use of the site.  The content provided on this page is strictly for informational purposes only.