• May 27, 2024

Strategies for Buying a Hot REO

Real estate owned (REO) properties are previous foreclosures that weren’t purchased at auction. The bank or financial institution now owns the property outright. In most instances, the bank previously held the property mortgage. Since banks aren’t in the business of owning or managing a property portfolio, it’s possible for the buyer or investor to purchase at advantageous prices. There are risks associated with buying REOs. Here are several suggestions to help first time buyers make a financially favorable deal:

Ask for an inspection

REOs aren’t traditional properties. These usually bank-owned investments must be liquidated as is because the bank isn’t interested in making improvements or performing repairs. The bank wants to pass along any issues related to the property to the new owner. However, a smart investor knows how to pre-inspect the property or engages a certified reputable home inspector to view the property. Although this costs a bit more at the outset, the ability to identify expensive repairs or problems can save capital later. According to authors Tim and Aram Shah of “REO Boom: How to Manage, List, and Cash in on Bank-Owned Properties,” (2013) the information gained can be effectively used to negotiate a better price with the seller.

Have more cash on hand

If the REO property is attractive, it’s likely to generate many offers. In some cases, the property is so attractive that the buyer must have more money available to increase his or her offer. If adding to the purchase price isn’t possible, cash on hand can accelerate the close or a higher cash deposit can be sufficiently attractive to the seller. Of course, it’s best to offer a realistic bid at the outset.


Kuba Jewgieniew practices a data-driven approach to real estate brokerage. His techniques have elevated Realty ONE Group to the top of real estate brokerage firms in the United States. Let Kuba Jewgieniew and Realty ONE Group help you buy or sell your next property.