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An REO (real estate owned) transaction is very different from a traditional real estate transaction. If you’re thinking about purchasing an REO property, you should understand what these differences are and how they affect you. Below, the team at First Financial Title Agency of Minnesota, a closing title company in Burnsville, MN, explains what you need to know below.

Closing Title Company’s Guide to REO vs. Traditional Sales

What an REO Property Isescrow services

When a property has gone into default, it is seized by the bank or other lenders. They will try to short sale the home at auction, and if it does not sell it will become an REO property. The lender will then prepare the home for the market by clearing liens on the property and removing the occupants. Rather than setting the price based on their own costs as they did at auction, they’ll research market prices and set one accordingly.

What the Main Differences Are

In an REO transaction, the seller is the lender represented by an asset management company rather than the traditional homeowner or investor. They will prioritize a quick sale at or above their bottom line price, depending on their costs for the property. The property will likely be sold “as is”, and the condition can vary greatly because people may vandalize a property when they are foreclosed. As a result, it’s very important to walk through the home yourself and get inspections.

 There is less room for negotiations than there is in a traditional sale, since the property is offered as-is and they will not allow for many contingencies. In a traditional sale, you’ll usually negotiate the price, terms, contingencies and closing dates that will work best for both buyer and seller. In an REO, your only negotiation will likely be the price.

The team at First Financial Title Agency of Minnesota, Inc. makes the title closing and escrow services easy for any type of sale. Their closing title company has served the community since 1989 and has since earned an A+ rating with the Better Business Bureau. Get a title policy online or call them at (952) 831-5010 to ask about their services.

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