I love to learn. If only they paid you to earn an MBA or other degree...someday, I tell myself! In the meantime I find other ways to further my knowledge base. Last Thursday I spent my "day off" at the Hotel Northampton taking a "Loss Mitigation" class held by our board of Realtors. It was outstanding!

The first session focused on "REO"s, which stands for "Real Estate Owned". I have had personal experience with such a bank owned property. Ryan and I bought and sold one last year and are in the process of purchasing another. It can be a great deal but is certainly BUYER BEWARE! The banks may allow you to have a home inspection but often the homes are winterized and they will not turn the utilities back on. You have no way of learning the history of the property (you can try pulling the file at town hall but will they know of water in the basement? no!) which is why it is important to do an many inspections as possible. But the banks usually sell the homes "AS IS" so there is NO re-negotiating based on home inspection finds. You can walk away and get your deposit back but ask for a credit on something? Not likely. It can't hurt to ask, I have learned, but be prepared for a big fat NOPE!

There is NO negotiating the P&S so don't even bother to have your attorney look at it. (well they can explain it to you but you get the idea...)  There are no guarantees on the closing date either so if you are trying to line up the purchase with the closing of your current residence or the expiration of a lease you need to have back up plans! And they will certainly NOT take a home sale contingency!

Boy do I sound negative! Let's look at the positive.....REOS can be a great deal, and when you compare to an auction purchase you have time to do "due" diligence (inspections) and you can have a mortgage clause. Also in most cases any back taxes, second liens, etc are taken care of in the process so no hidden surprises there.

What really shocked me in class is just how bad things are in the rest of the country. We are certainly seeing a major uptick in REOs here in Eastern MA, but if they are well priced they are gone. I bought our latest one in the first 5 minutes it was on the market! There are a few on the market in most towns, in general, but listen to this! Our instructor was from Ohio...he says there is a town there about the size of Lexington, MA (around 30,000 people) and there are 1,000 REOS on the market in that one town alone! That blew my mind! Their economy is in a terrible place, with plants closing etc. It's hard to imagine! I think we need to consider ourselves extremely fortunate in this area.....we are ticking along quite well when you consider!

Next time..what is a short sale and can it be a good deal!?

Have a great weekend!