#1 Real Estate Broker for REO
“REO” stands for Real Estate Owned. It is a class of property owned by a lender, typically a bank, government agency or government loan insurer due to a foreclosure. Minnesota REO Properties, Inc. works for and represents asset managers in valuing, listing, and selling REO property. We help buyers and investors that want to purchase them. In valuing property, Minnesota REO Properties, Inc. performs about 1000 Broker Price Opinions or BPO’s per month. A BPO is much like a Competitive Market Analysis.
Purchasing an REO is Different
Title work and financing are a couple of things that stand out. Some REO property require more than “sweat equity” to meet lender occupancy requirements. Conventional 20% mortgage products are not always a slam dunk after an underwriter or appraiser submits a list of repairs required to close. We help buyers and investors navigate these issues and provide access to mortgage lenders that specialize in REO. If you are new to buying an REO property or are thinking about buying one, working with an agent or not, some things to consider are:
- What is a BPO and how do banks use them?
- REO Mortgages, what are underwriters looking at?
- Title work, who closes for the bank?
- Closing date, are you ready?
What is a BPO and how do banks use them?
A BPO or Broker Price Opinion is like a Competitive Market Analysis. Some things included in a BPO is a drive-by exterior examination, external data sources, previous sale data, property assessment data, recent comparable sales, and current neighborhood listings, as well as a photograph of the subject property. BPO’s are used to establish an REO property’s market value.
REO Mortgages: QM vs Non-QM
There are two basic types of mortgages, QM or qualified mortgages and Non-QM or non-qualified mortgages. A Qualified Mortgage (QM) is a defined class of mortgages that meet certain borrower and lender standards outlined in the Dodd-Frank regulation. A Non-QM is a type of mortgage loan that allows you to qualify based on alternative methods. Some purchasers of REO property that require repairs will use a non-QM mortgage to acquire it. After the repairs are completed, they seek to refinance with QM. Minnesota REO Properties Inc. can help provide access to these lenders that specialize in REO.
Title work, who closes for the bank?
The bank uses a specialist in REO for title work and the closing. Since a foreclosure was involved, title work needs to involve the bank and the asset manager. It is important the buyer’s closer understands what they can and cannot do to acquire free and clear title work. Therefore, we recommend buyers and investors use the bank’s title company and for peace of mind and purchase a buyer’s title insurance policy.
Closing date, are you ready?
Did you know that by missing a closing date could cost you up to $200.00 a day in penalties? This language is in most REO purchase contracts. Buying a REO property is a great opportunity to purchase a property at a discount or wholesale pricing. However, those discounts have conditions. The most overlooked condition is the closing date. Minnesota REO Properties, Inc. will constantly review and update you to ensure your REO purchase closes on time and without a penalty.