Buyers don't always set out to find a foreclosure agent, known as a real estate owned (REO) agent (bank-owned), or an agent who specializes in short sales, but they should. Buyers in the know are attracted to these types of transactions because they are looking for a good deal. Often, REOs and short sale listings offer buyers an opportunity to buy a home under market value.
Bear in mind, however, that not every REO listing nor short sale listing is priced under market. In some ways, they aren't any different from any other type of listing. Buyers will find a Goldilocks variety: Some REOs and short sales are priced too high, some too low, and some are just right. Hence, knowing the fair market values of the real estate assets in consideration is a prerequisite. Moreover, having enough liquid cash on hand will allow you to buy these properties when the right opportunity does arise.
- Foreclosure agents are also known as real estate owned (REO) agents or short sale agents.
- To find an REO, ask friends and family for referrals, talk to agents at open houses, and search online.
- There are some benefits of using an REO to help you find a house. The bank that owns the property may compromise depending on how long they have held it.
Searching for an REO / Short Sale Buyer's Agent
In soft or falling real estate markets, many buyer's agents find the bulk of sales comprise of bank-owned homes and short sales. If you can find a busy buyer's agent, they will most likely represent a lot of REO and short sale buyers. Some places you can look to find an REO/short sale buyer's agent are:
- Referral from friends, co-workers, or family: Chances are someone you know has recently purchased a home. Ask for a referral to their agent, then call to inquire about REO and short sale experience. Short sale referral agents who don't negotiate bank-owned or short sale transactions generally know which agents do.
- Agents regularly pay each other referral fees: this means the referring agent has an added incentive to make sure you end up in the right hands—because if it doesn't close, they don't get a referral fee for you.
- Talk to agents at open houses: Whether the host of the open house is the actual listing agent or another agent from the same office doesn't really matter as long as you aren't there to buy that particular home. Open houses give buyers a relaxed, non-pressuring atmosphere to talk with other agents.
- Search for REO agents online: Many agents write blogs about their experiences. Be careful you aren't drawn into a site where the agency relies solely on keywords for internet traffic.
- Search by "REO" or "short sale" from your favorite search engine.
- Sort MLS records by REO and short sale agents: If you have a friend in the real estate business with access to MLS, run a search by limiting the returns to REOs and short sales, and pull up the closed sales for the past six months in your preferred ZIP code or neighborhood.
Some Benefits of Using an REO
There are some benefits of using an REO to help you find a house. The bank that owns the property may agree to make some allowances or compromises depending on how long they have held the property.
You'll receive a title from the bank, which will be clean and clear of all encumbrances (claims against the property), unlike a foreclosure. In a traditional foreclosure, you assume any and all claims against the property when you purchase it.