REO Basics – What is a REO bank-owned property in Hawaii?

Asset Managers, REO ServicesIn Hawaii, a real estate owned (REO) property is one that is owned by a lender. REO or bank-owned describes a class of Hawaii property that’s distinct from other types of real estate listings across our islands.

Typically, REOs are owned by either a bank, government agency or government loan insurer. Ownership reverts to the bank or lender when a homeowner defaults on their mortgage.

We’ll walk you through some of the more basic questions about bank-owned properties here, but if you already know the basics and want to know more about purchasing an REO bank-owned property, check out A Guide to Buying REO bank-owned properties in Hawaii.

What is an REO or bank-owned property?

A real estate owned (REO) property in Hawaii is one that is typically owned by a lender—including banks, government agencies or government loan insurers. They are often referred to as either REO or bank-owned real estate.

REO or bank owned describes a class of property. Ownership reverts to the bank or lender when a homeowner defaults on their mortgage. Typically, a lengthy foreclosure process ensues, and the bank or lender is left with a property to sell.

REOs, as they’re commonly called, can often be well-priced alternatives to purchasing traditional listings. REO properties often present buyers with unique purchase opportunities—especially in the Hawaii market, where there’s a very limited number of listings at low prices.

Hawaii banks and lenders use in-house Asset Managers who manage the process of liquidating bank-owned properties. Often they turn to specialized, licensed real estate agents with experience with banking regulations.

The lender’s goal is often to liquidate bank-owned properties quickly, so bank-owned property assets often (though not always) present unique opportunities for home buyers looking for homes for lower prices than what’s available through traditional listing channels.

When do properties become defined as “real estate owned” or REO?
Asset managers at Hawaii banks and lenders will sometimes try to auction REO properties, and failing that, a court commissioner will assign the title of a home in foreclosure to the bank or lender. It’s at this point that a property becomes REO or bank-owned.

How is an REO sale different from a regular listing sale in Hawaii?

Banking is a highly regulated industry, and as such, the sale of a bank-owned property is significantly different from that of a regular property listing on the MLS or through a private sale.

A lender’s Asset Manager will typically turn to a real estate professional with expertise in marketing and selling REO bank-owned properties because they possess specialized knowledge about the process as it relates to banking industry regulations.

They are also typically very experienced as listing agents and highly capable of providing the bank or lender with an accurate valuation of the property to determine a selling price.

You can read more about the specialized skills of REO bank-owned specialists in our article our full suite of REO Services here.

Can an REO property purchase in Hawaii be financed?

Yes, a bank-owned property can be financed for purchase, just like you would apply for financing for a listing on the MLS. Conventional, VA, FHA and other traditional financing are available to Hawaii homebuyers looking to purchase an REO bank-owned property.

However, there are some unique things to watch out for during the contract negotiation and purchase, which is why we recommend turning to our team of highly qualified and experienced REO bank-owned specialists.

You can learn more about the process purchasing an REO bank-owned property in A Guide to Buying REO bank-owned properties in Hawaii.