Bank Homes Direct Frequently Asked Questions

1. What is Real Estate Owned (REO)?

Real Estate Owned by the lender is the last step in the foreclosure process. Ownership of the property has been conveyed back to the lender, either through an agreement with the owner during pre-foreclosure or at the public auction. Lenders typically want to sell the property quickly to recover their losses.

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2. How do I buy bank-owned REO properties?

Start by getting pre-qualified with a mortgage lender. This helps you determine how much you as a buyer can afford and helps demonstrate to any sellers that you are a serious buyer who is ready to move quickly once you make an offer on a property.

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Once you're pre-qualified to buy, you can contact the lender directly and ask for the REO or asset management department to find out how you can view and make an offer on the property. Keep in mind that sometimes contacting the lender can be frustrating, since the main purpose of a lender is to loan money, not to sell property. So even though the bank may have a department that handles bank-owned property for sale, that department may be hard to track down.

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3. How does Bank Homes Direct help me buy properties once I join?

Bank Homes Direct compiles a daily updated, nationwide list of foreclosed properties that have been taken back by the foreclosing lenders, allowing you to locate these potential bargain properties in your area.

Although it is not an agent or broker directly for these properties, Bank Homes Direct has several tools and resources available to members to assist in pursuing any property listed on the Bank Homes Direct database. Additionally, we are constantly adding features to make the site more useful to buyers.

Current features include:

  1. Pre-qualification: Members can click on the "Get Pre-Approved" tab on the home page or "Get Pre-Qualified" on the Property Details page of any individual property. This will give you the option of either calling our mortgage partner directly or applying online to get pre-qualified. Pre-qualification is an important step in the process because through it you accomplish two things: you learn the price range of the homes you are qualified to purchase, and you show potential sellers that you are serious and ready to act quickly when you make an offer.
  2. Daily e-mail alerts of saved searches: The Bank Homes Direct search page allows you to save your search criteria by using the "Save Search" tool. You also have the option of having any properties that match your search criteria sent to you daily via e-mail. To do so, all you need to do is click either on "Receive daily notifications of new listings that match this search" or on the "Daily Notice" column on your list of saved searches in "My Bank Homes."
  3. In-depth property evaluation reports: Comparable sales, loan history and market value reports are all available for properties on the Bank Homes Direct database. These reports allow you to assess the value of a property.
  4. Saved properties folder: Allows you to save properties you are interested in so you can look them up quickly in the future. You can add any property to the "Saved Properties" tab when you do a search. In the Property Details screen just click on "Save to My Bank Homes." To access your saved properties, just click on the "My Bank Homes" tab on any screen and then click on the "Preferred Listings" tab.
  5. Recently viewed properties: The last five properties you viewed are automatically saved in "My Bank Homes," so the next time you visit the site you can pick up where you left off from your last visit.

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4. How do I contact the lender to buy an REO?

Upon registering with Bank Homes Direct you have access to the addresses of all properties you are interested in pursuing as a potential buyer. Once gaining access to a particular property of interest, your next step will be to contact the lender who now owns the property in order to acquire more details and possibly set up a viewing of the property. If the lender has hired a real estate agent to list the property, then you will need to contact that agent directly.

Keep in mind, however, that contacting the lender directly can be the most frustrating step in the process. After all, the lender's main business is lending money, not owning and selling property. So even if the foreclosing lender has a department that handles bank-owned property (REOs) for sale, that department may be hard to track down and contact.

Bank Homes Direct usually has the name of the lender listed on the property, but if you have trouble finding a phone number or address, try these suggestions for contacting the lender or the listing agent.

Contact the local property assessor's office (either through the county or city government) and ask whom they have listed as the owner of the property. The property assessor should also be able to provide the mailing address of the owner. Go to http://www.statelocalgov.net/index.cfm to find the local property assessor in your area. (For example, the local property assessor link for the New York City and its boroughs is http://webapps.nyc.gov:8084/CICS/fin1/find001I)


5. How do I make offers on bank-owned (REO) properties?

Although the lender usually removes any outstanding liens so that the property has clear title, you should still make any purchase offer contingent on a title search. Also, find out if the lender has made any repairs to the property or if you are buying it "as is." The lender always wants to recover any money it's put into the property, but that does not mean you can't make a successful offer that's still substantially under market value.

There is no set time frame within which the lenders must sell their REOs; however, as a general rule they want to get REOs off their books as quickly as possible. As a result, many REOs do sell quickly. The only exception is if there is a "redemption period" allowed by the state foreclosure law, giving the former owner time to pay off all monies owed and reclaim ownership of the property, even after it goes to REO. If this is the case, the bank will typically wait until the end of the redemption period to sell the property.

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6. Are there risks associated with buying an REO?

Yes. Even the lender may not always know the condition of the property once it takes back ownership. If the lender is selling the property in "as is" condition, you assume all the risk associated with purchasing the property. To protect yourself, you should always order a title search before making any offer on the property. Also, you need to find out if the lender has made any repairs to the property, or if the property is being sold "as is."

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7. How do I determine the purchase price for an REO property?

When available, the amount listed on Bank Homes Direct is usually based on the unpaid loan balance owed the lender. Therefore, any offers made to the foreclosing lender should start at that amount since it is the amount the lender needs in order to break even on the property.

However, if the foreclosing lender has gone ahead and listed the property with a real estate agent (known as an REO agent), then the asking price can be easily found in the Multiple Listing Service (MLS).

If you are working with a real estate agent (which is recommended for first-time foreclosure buyers), ask the agent to obtain a Comparative Market Analysis (known as a CMA) for a property you have selected. The CMA is a standard marketing tool used by real estate agents in every community and made available without charge to realtors by local title and escrow companies. These reports contain important information about the property including vesting confirmation, liens of record and a plot map showing the physical features of the site.

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8. Why is some of the data missing even after I subscribe?

The amount of data we are able to obtain varies from county to county depending on what is included in the foreclosure notices we track. In some areas of the country certain fields of information are often left blank, whereas in other areas we that information is made available. The data on Bank Homes Direct should always provide you with a good lead on a property in foreclosure, but we are limited by the amount of data provided in the foreclosure notices supplied by the particular county.

Below are suggestions for using our data as a launching pad and cross-referencing with other sources to do further research on the properties listed on Bank Homes Direct.

  1. Look up the address or parcel number of the property with the local property assessor.

    Many county or local assessors allow for property searches online. Go to http://www.statelocalgov.net/index.cfm to check on your particular area of interest. This will often give you the name of the current owner of the property (or the lender if the property is an REO), details about the property characteristics (beds, baths, square footage, zoning, etc.), the assessed value of the property and possibly even the sales history.
  2. Have your real estate agent research the property for you.

    Many real estate agents have access to title information that allows them to research a property. If you give them the address or parcel number of the property they should be able find the current owner and even liens against the property.
  3. Order additional property reports at:
    https://www.realtytrac.com/database/noframes/HWPropertyReports.asp.

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9. How do I sign up for daily e-mail notification of updated and new property in my area?

Subscribers simply log on to Bank Homes Direct and input whatever search criteria they wish (i.e. state, county or city, price range, beds and baths, etc.) on the search page. Next, give the search a name in the "Save Search" box and then click on "Receive daily notifications of new listings that match this area." Finally, click on "Save This Search" and new properties matching your search criteria will be automatically sent to you via e-mail on a daily basis.

To access that search later, just go back to the search page and click on "View Saved Searches." Your saved searches will appear under the "Your Saved Searches" caption. Subscribers can also check and manage their list of daily notifications by clicking on "My Bank Homes" and looking under the "Saved Searches" section.

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10. Why should I buy a bank-owned REO?

One of the primary advantages of buying a bank-owned REO property is that investors are purchasing a property without liens or other encumbrances. Before lenders make REO properties available for sale, they typically expunge all liens or claims against the property. Any cloud on the title — a second or third mortgage, mechanics liens, taxes or any other liens attached by creditors — are wiped out. Moreover, skilled investors can negotiate with the lender's loss mitigation department to discount the price to a fraction of its market value. Besides negotiating price, many buyers of REO properties also negotiate favorable lending terms below existing market rates.

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11. What are the advantages of buying bank-owned properties or REO homes?

For real estate investors and homebuyers, bank-owned properties and REOs offer opportunities that are not available in the pre-foreclosure and auction phase of the foreclosure process. Buying bank-owned real estate offers the foreclosure buyer many advantages:

  • Bank-owned properties are usually sold at below-market prices with great terms like low down payments and low interest rates.
  • Buying bank-owned properties involves less risk and less competition.
  • Foreclosures that are owned by banks are usually clear of any liens that may have been recorded against the property.
  • Since the seller of REO homes is also the lender, you can negotiate with the bank to have them pay for all or some of the closing costs.
  • Bank-owned properties are usually vacant because the banks have evicted the previous owner, saving the investor or homebuyer time, money and emotional toll involved in the eviction process.

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12. Where can I find REOs?

There are several ways to locate bank-owned REO properties. With the advent of the Internet, finding bank-owned REO properties is easy. First, investors can search for thousands of bank-owned properties online here at BankHomesDirect.com. Another way to locate REOs is to go directly to lenders themselves. Each lending institution, however, handles REO properties differently. Some lenders post bank-owned real estate lists on their websites. Smaller local banks usually have one individual who is in charge of the bank's REO inventory. Larger regional and national lending institutions, on the other hand, have large departments that deal exclusively with selling bank-owned properties. Frequently, this department is referred to as the loss mitigation department. The job of the loss mitigation department is to mitigate the loss or minimize the damage caused by loans that have defaulted, which lenders call non-performing loans.

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