COULD THE NATURE OF REO DEALS BE CHANGING?
REO property is Real Estate Owned property. The term REO is used to describe properties that are taken back by a foreclosing lender if a third party does not buy the property at the foreclosure auction. Before inquiring into buying an REO property, there are some things that you may want to think about. Lender’s are generally not willing to alter contracts on these properties. The terms of the contract are usually final and most of these contracts will instruct the buyer or buyer’s attorney not to make any changes to the contract. This differs from most real estate contracts, where changes are made to the contract several times by both parties until a final contract, which is acceptable for both parties, is executed. REO contracts are also under much tighter windows for execution with respect to time. Lenders generally will not allow a contract for an REO property to sit out there very long before they begin demanding that the broker return an executed contract or threaten to cancel the deal. However,we have recently seen a lender allow an extension of time to execute an REO contract, offer to make repairs to the property, make a counter-offer that was lower than the buyer’s original offer, and consider contract changes required by a purchaser to obtain a grant.
Aside from the above mentioned recent deal, which does provide hope, REO purchases still appear to be pretty much take it or leave it deals. Most people who inquire about REO properties don’t realize this key point. It seems that a common misconception about REOs is that they are only different from regular real estate in that the lender owns them. The fact that the procedure for purchasing an REO is so different has come as a bit of a shock to some. As always, if you are interested in purchasing an REO property or have any questions regarding the purchase of an REO property, please feel free to contact our office at 516-777-0283!