Some lenders — banks, credit unions, insurers, and mortgage companies — outsource the REO duties to another company. Those companies specialize in doing all the work of a regular REO department.
They protect the asset and hire an inspector to report on the property's condition. They winterize the property, if necessary, by draining pipes, turning off water, and making sure the heating system is working. They rekey the property, changing the locks to prevent the defaulted owner or others from entering the property. They often provide digital photos for the lender. They create reports, such as pre-foreclosure evaluations, market analysis, and occupancy verification. REO companies also take care of the utilities, including the transfer and connection to the lender's name.
Most REO companies, as part of their ongoing service, provide monthly status reporting on the property. They attempt to preserve the property (and the lender's collateral) by making sure the property is maintained properly until sold.
Some REO companies manage the evictions for the lender. It is not uncommon for them to pay cash for the keys to property — a way to get the defaulted property owner out of the property. Often cheaper than the legal process, and always faster, the property owner is offered a small amount of cash to vacate the property over a weekend and turn all the keys into the REO company.
The REO company, which is familiar with the local market, develops a marketing plan to sell the property. The company often places the property in a multiple listing service, orders print advertising, and determines where to list the property on the Internet. They often negotiate any purchase offers on behalf of the lender. REO companies may list the property for sale with a local real-estate broker or attempt to market the property directly to the public.
Locating an REO company that serves your area may take some work, but once you do, it could become a source of ongoing leads for foreclosure properties that are new to the market. REO companies often carry out the negotiations between you and the lender. Typically the REO company has no authority to sell the property on behalf of the lender. Rather, the REO company can only submit written purchase offers to the lender and await the decision. Some lenders will not provide financing on REO properties, while others will do so. The REO company usually knows what its client lender will accept. Don't be afraid to ask.