Steps to Closing a Bulk REO Purchase
REO stands for Real Estate Owned. These are the properties that have being seized by the company due to no payment of mortgage or other such defaults. These properties are held in custody by the company or government agency until another party agrees to buy it. There is a well laid procedure for such a purchase. Red tape slowing down does not occur in such deal and this is a major advantage.
When REO property is set to be sold, the process involved is competitive bidding. Through an escrow agent, anyone wishing to purchase the property can quote their bids for consideration. We follow the essential steps of these purchases.
- Transfer of a completed bulk REO agreement – This is sent to the real estate company by the party that wishes to acquire the REO.
- The real estate company then sends the document to the escrow and the broker of record.
- After an agreement has been reached, banks come into the scene. Escrows then revert for a bank letter to the bank of the buyer.
- Banks do the necessary checks and revert to the escrow agent. Verification of the funds of the buying party by the escrow agents
- Broker of Records come into play here. It forwards the letter through the adequate financial details and places a bid for the property.
- If the bid of a prospective buyer is successful, he is notified through the escrow agent and given a 48 hour red tape period to check the condition and decide whether to go ahead or not.
- During this period, the prospective buyer can go through the tape and check the property.
Of course there can be times, when the buyer decides against buying the property. Under such conditions, the escrow is liable to return 90% of the payment made by the buyer. 10% is held by the company as non refundable charges and damage claims.