Santa Fe, New Mexico Real Estate Owned (REO) Properties
Real Estate Owned (REO) Properties
When looking for a home, one avenue to consider is the purchase of an REO (Real Estate Owned) property. An REO home is a property that has been repossessed by a bank after the property has failed to be purchased at a foreclosure auction. Since the amount owed to the bank is in most cases significantly more than what the property is actually worth, it is common for foreclosure auctions to be unsuccessful. Indeed, buying a foreclosed property at auction can be a very risky purchase, as the new homeowner is responsible for taking care of any existing liens on the property, as well evicting any tenants or squatters that may remain on the property. And because the winning bidder must have a cashier’s check on hand at the time of the bidding, there isn’t much time allotted to inspect the condition of the property, which will be auctioned as-is.
Since REO properties have been repossessed by the bank that issued the loan for the home, the bank ends up doing most of the “dirty work.” The bank will clear anything remaining on the title—such as, existing mortgages, property taxes, outstanding fees, tax liens, mechanic’s liens and attorney fees. Also, the bank handles any evictions if necessary and takes responsibility for securing the property against reentry by former tenants or squatters. This means that buying an REO is generally less risky than buying a foreclosed home at auction.
One major benefit of buying an REO is that REO properties are often sold at below-market prices with low down payments and low interest rates. So, if you have the means and desire to fix up a less-than-perfect property, an REO might be right for you.
What should I look for in an REO?
While banks do take responsibility for tying up many of the legal loose ends for an REO, REOs are still sold as-is, since the bank is trying to avoid losing any more money on the property. Banks, therefore, will seldom agree to any repairs or additional maintenance for the property. So, there are certainly a number of things to be wary of when looking to purchase an REO home. Due to the nature of REOs (e.g., following a homeowner’s default on the mortgage), it is typical for REO properties to have structural or cosmetic problems that must be addressed. Problems could include anything from stained carpets and dingy walls, to leaking roofs and broken pipes. Insect and vermin infestations might also need to be addressed.
Thus, it is important not to go into purchasing an REO property blind. As with any real estate purchase, the key is to arm yourself with ample knowledge about the property you wish to purchase. While the bank won’t pay for inspections, banks will allow you to have as many inspections of the property as you like. Again, being able to take the time to investigate the condition of a property is one of the major benefits to buying an REO property rather than a property directly from a foreclosure auction.
What are the Benefits of Going Through a Real Estate Agent When Purchasing an REO?
Because every bank handles its REOs differently, trying to find an REO on your own can be quite the challenge. Each bank has its own rules and requirements on how they sell REO properties, so going it alone means you have to familiarize yourself with not only the properties but the lending institutions that own the properties, which can be very time-consuming and confusing.
Going through a real estate agent means you will have someone on your side with experience in dealing with banks. They can help you decipher a bank’s fine print and help you set up the necessary inspections. Real estate agents have a wealth of information at their fingertips and resources that you may not.
Susan Orth has distinguished herself as one of the most dedicated real estate agents in the Santa Fe area, and has twenty-five years of real estate experience. When it comes to navigating the REO market, you can be sure that you are in good hands with Susan Orth.
Where Can I Find an REO that is perfect for Me?
There are currently 84 REO properties in the Multiple Listing Service (MLS), ranging from $34,000 to $1,595,000. By visiting http://www.santaferepos.com, you can peruse photos of the homes and read detailed descriptions. Simply, click on the “Search Listings” tab and scroll down to “Bank Owned Homes.” Also, consider signing up for email alerts, as this is a great way to learn of REO properties new to the market.