Real estate owned (REO) property is property that is owned by a bank or other lending institution, usually as the result of a foreclosure. An REO specialist is a real estate professional who specializes in buying such REO properties from the bank on behalf of clients. Finding the best REO specialist involves finding someone familiar with such sales, which are significantly different from a traditional home purchase. The best specialist will have a strong financial background, know how to keep communications open between the bank and the prospective buyer during what can be a long and involved process, and be open about potential problems. Credentials and experience also are important, because regular real estate agents may call themselves REO specialists without having the proper background or skills.
There is typically more negotiation and asset valuation work involved in buying an REO property than in a standard property purchase, so an REO specialist usually has more of a financial background than a standard real estate agent. When a homeowner decides to purchase an REO property, it often is because he or she can usually get a good deal — but there is a lot of negotiation that has to happen before an REO property can be purchased. To make the process go as smoothly as possible, an REO specialist should have a wealth of financial knowledge and know how to negotiate bank contracts, accurately value the property and mitigate any financial losses.
An REO specialist must know how to contact a bank about a client’s interest in an REO property. He or she also must be able to follow up with a bank to see how a potential sale is progressing, because this is different from checking in with a regular homeowner. If the specialist cannot do these tasks successfully, then the property may be sold to someone else before the specialist has time to negotiate a deal with the bank. Sales on foreclosure properties also may take longer to receive approval, because the bank has to decide if it is willing to let a property go for the offered price and possibly take a loss, a process that typically moves slower with a business than with individual homeowners. A good REO specialist will know how to keep the ball rolling with the bank and get the sale closed as soon as possible.
Aside from knowing how to work with the bank, REO specialists should be able to easily inform potential homeowners about the desired home's neighborhood and be open about any problems or pitfalls. They should honestly tell potential homeowners about property values, comparisons, taxes and fees. They also should be knowledgeable about the neighborhood’s crime rate, traffic, schools and utilities.
The homebuyer should check the REO specialist’s credentials, because there are many specialists who claim the title but lack experience. A qualified REO specialist will have significant experience and, most likely, special certifications or training. If the specialist cannot furnish this information, then it may be better to search for another specialist.
