(702) 836 3725
(702) 731 5709
3960 Howard Hughes Pkwy, Suite 150
Las Vegas, NV 89169
Did You Know.... You're Buying an REO?
What is an REO?
REO means "real estate owned" and is a term used by the financial industry to describe properties
(assets) that a financial institution has repossessed by foreclosure, a deed-in-lieu of foreclosure, or other means. REO
properties are also called "bank owned" or "corporate owned" because the owner of record is an institution instead of a
Is an REO property a "better" deal than other properties on the market?
Only a willing buyer and seller determine
the purchase price of a property. Just like other resale homes, REO properties have different amenities and are in various
stages of age and repair. All of these factors influence the price that a buyer and seller are willing to agree on.
What kind of financing is available for an REO property? It is a sad truth that some properties have been vandalized.
Certain loan products (for example, FHA loans) are not available for properties that do not have certain appliances, floor
coverings or utilities. Check with your loan provider for complete and up-to-date details about your loan requirements.
What happens after my offer is written?
Your agent will submit the offer to the listing agent for presentation to the
seller. Many REO sellers use Internet-based programs, and your agent or the listing agent will enter the material terms of
the offer into the program for the seller's review. Your agent may ask the listing agent about the seller's review policies
and timeframes, for example, whether offers are reviewed on a specific day of the month or after the property has been on
the market a certain length of time.
How long will it take to receive an answer?
The response time varies according to the seller and its internal procedures,
and whether there are investors involved on the seller's side. Often, the response will be provided to the listing agent
verbally or via an email. The agents will then work together to reduce the agreement to "hard copy" and obtain signatures.
If you have a specific deadline or timeframe for purchasing a home, you should discuss that with your agent.
How will I know if I'm competing against other potential buyers?
Listing agents mayor may not have authority from
the seller to disclose multiple offers. The REALTOR Code of Ethics requires a listing agent to have the seller's approval
before disclosing the existence of other unaccepted offers on the property. A seller may respond to numerous offers with
a "multiple counteroffer." This document alerts two or more buyers that they are in a competitive situation. If you receive
such a counteroffer (or any counteroffer), carefully review it with your agent.
Can I choose the title company?
Typically, the banks and lenders who have foreclosed on these homes have established
business relationships with title companies, who often act as the escrow holder. Even before a home is put on the market,
the title company may have opened a file and started its research on the title. Under federal law, a seller cannot require a
buyer to purchase title insurance from a particular company, but if the seller is paying for the buyer's title policy then the
seller may choose the title company. If you have already written out a check for earnest money, you may have to issue a
new check to a different title company. For a consumer's guide to title insurance, go to www.doi.state.nv.us.
What kind of disclosures will I receive from the seller?
Federal and state laws require a seller to make certain
disclosures to a prospective purchaser. The "Residential Disclosure Guide" provided by your agent outlines these
disclosures. Some disclosures, such as the Seller's Real Property Disclosure, can be waived according to state law.
Others, such as the Common Interest Community resale package, cannot. If you close escrow without receiving a required disclosure, your right to sue for such a failure may be affected. If you
have any concerns, consult with legal counsel prior to closing escrow.
Will the seller pay for repairs? A typical REO is sold "as is," meaning that the seller will not do repairs on the property
or provide funds at closing for repairs. However, buyer's agents may still ask for repairs and attempt to negotiate that
point. As the adage goes, "you won't know unless you ask." You may not receive multiple keys or garage openers.
Should I have a home inspection?
Although an REO seller may not provide a property disclosure or make repairs, the
buyer is still entitled to have an inspector review the home. Buyers should consult whatever qualified professionals (such
as home inspectors, mold inspectors, pest/termite inspectors) they desire to determine the state of the property and
whether the property meets their needs. Check with your agent about the applicable time period (due diligence) for
having such inspections completed.
THIS NOTICE PROVIDES GENERAL INFORMATION AND IS NOT INTENDED TO PROVIDE
INFORMATION OR ADVICE ON ANY SPECIFIC TRANSACTION. PARTIES TO ANY REAL ESTATE
TRANSACTION SHOULD SEEK COMPETENT LEGAL AND/OR TAX COUNSEL TO DETERMINE THE
LEGAL, CREDIT AND TAX CONSEQUENCES OF BUYING OR SELLING A HOME.