High home prices and limited inventory in Denver have prompted many buyers to consider distressed properties – short sales, real estate owned (REO) homes, foreclosures, etc. as a way to break into homeownership. These types of purchases are different than traditional sales, but they can often be a great value – if you know what to expect along the way. Here we’ll break down the differences between foreclosure properties and REO properties so you can decide which might be a better fit for you.
- In a foreclosure situation, lenders auction off homes after the owners stop paying their mortgages. These properties are sold at public auctions. The property becomes an REO after it does not sell at auction, and the bank takes ownership of it. These bank-owned properties (REOs) are listed and sold by real estate agents.
- Be advised that buying at auction can be difficult. Not only are you trying to outbid professional real estate investors, but often these purchases are cash only.
- Auction homes are sold sight-unseen, which means you’ll have no idea what repair jobs face you after you complete your purchase.
- Buying an REO property is easier. The bank that owns the property wants to sell it as quickly as possible, so they hire a real estate agent to close the sale. You can buy one of these bank-owned properties by making an offer, just as you would with any other type of home sale. The bank will either accept or counter, and you proceed just as you would a traditional sale.
- REO properties can be a great value. Sure, the bank will want to get the most they can from the sale, but REO properties are generally listed at fair market value.
Are you interested in checking out REO properties in Denver? Contact Metrowest today – we specialize in these types of sales and would love to help you start the process!