Patience is a virtue, and a necessity, when buying a foreclosed home straight from a lender.
With prices down, real estate agents across the country report that more investors are interested in acquiring properties this way. But it isn’t simple or quick. There is a lot to watch out for, such as many layers of bureaucracy that can slow a sale.
Would-be buyers can find repossessed homes at lender Web sites, at auctions and through conventional property listings. They’re called “bank owned,” “lender owned” or “REO” for “real estate owned.”
But lenders selling properties often are just asset managers, not really owners. A deed may bear the lender’s name, but because banks and other lenders sell loans into the secondary mortgage market, the real owner of both the loan and property is often hidden.
The lender “doesn’t have to tell you who you’re actually dealing with,” said Jim Richman, president of Richman & Associates, a real estate and debt restructuring firm in Glendale, Calif. “They keep it a complete mystery to keep control.”
Short sales, which occur before a foreclosure is finished, can be daunting. They involve both lender and homeowner. Buyers expect a foreclosure sale, of property a lender’s already repossessed, to be smoother.
That’s not always the case. Richman says most lenders need an OK from any secondary-market owners for foreclosure sales that involve a loss. And if the loan carried private mortgage insurance, its guarantor may also need to sign off.
“Realtors are used to 24 to 48 hours to finalize an offer, and with the banks…
