REO Frequently Asked Questions
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General Information
What is an REO?
An REO is real estate owned by a bank or lending institution that is usually obtained through foreclosure. Once the foreclosure sale takes place the mortgage loan on the property is dissolved
What is a foreclosure property?
When a mortgagee (property owner) defaults on his payments, the Bank or lending institution tries to sell the property at a foreclosure auction. The minimum bid at a foreclosure auction is usually the amount owed on the note plus delinquent interest and costs. If the property is not sold at the auction, the bank or lending institution takes the property and it is then known as an REO or Bank Owned Property.
Why are REO's sold "as is?"
Since the Bank never lived in the house, it cannot in good faith tell a buyer what the history of the house’s condition is. An owner is required by law to disclose his knowledge of defects a home had to help a buyer make an informed decision. Since a Bank or lending institution did not own the property previously, it does not have any knowledge of the property’s previous condition.
What if the property requires repairs, either minor or substantial?
Make sure that you speak with the seller’s (listing) agent to ensure that you understand the terms of our listing clearly. In most cases, the property will be offered in an "as is" condition, with the list price reflecting its condition. When purchasing a property "as is", ensure you have done your homework to clearly understand the structural and mechanical condition of the building, HVAC, internal plumbing, utilities, including the well and septic system (if applicable).
I have a real-estate agent (buyer's agent) that will represent me in the purchase of property. There is a property listed on the PennyMac web page that I would like to know more about. Should I call PennyMac or should I call my real-estate agent?
If you have a buyer's agent that will represent you in the purchase of property it is very important that you have them call the listing agent for that property and NOT PennyMac. There is a listing agent associated with every property that PennyMac owns and they are authorized to act on our behalf in showing the property and receiving any offers.
Can I make an offer on a PennyMac REO property without going through a listing agent?
No, PennyMac requires a local broker to represent its interest in the property. The broker performs many property management functions for PennyMac besides listing the property and is a valuable resource for PennyMac. Must I have a buyer's agent to purchase REO property from PennyMac? No. PennyMac listing agents will gladly assist you in the process of purchasing our REO property listings. All PennyMac listing agents are experienced specialists trained to sell REO properties.
Will you counter my offer if it is considered unacceptable?
Yes, offers can be countered by both parties as in a normal real estate transaction. Will PennyMac accept an offer contingent on the sale of my house? No, PennyMac will not accept offers contingent on the sale of your current home. Other types of contingencies will be considered on a case-by-case basis.
Why do you require that I get prequalified by PennyMac before negotiating a home purchase offer?
PennyMac wants to be sure that prospective buyers will be able to complete the sales transaction, including obtaining property financing when needed. This financial detail from a prospective buyer will enable PennyMac to tailor the transaction to each buyer’s specific circumstances.
A loan prequalification doesn't mean your loan is approved. You must obtain loan approval separately (either with PennyMac or with another lender) after you are prequalified and your purchase offer is accepted by PennyMac.
Do you make improvements to the properties before selling them?
Each property is handled individually. The PennyMac listing agent can provide details regarding repairs. It is recommended that prospective buyers complete a thorough inspection using a licensed property inspector before purchasing a property.
Can I have inspections done on the property?
Yes, you can have the property inspected at your own expense. Remember that PennyMac does not make any representation or warranty to the condition of the property, and strongly recommends professional inspections by licensed inspectors.
After submitting my offer on a REO property, how long should it take to receive a response?
PennyMac will provide either an offer acceptance or counter offer to our listing agent within 48 hours of receiving the offer from our listing agent. The listing agent will inform your buyer's agent of our response if you are working with a separate agent, or you directly. If an offer is submitted during the weekend, it will be reviewed on the next business day.
