Making an offer on REO property or a foreclosure in Brandon?
Smart consumers will turn to a seasoned pro when considering a foreclosed property.
For more information, simply contact me through my site or e-mail me. I'm happy to address any questions you have about real estate foreclosures.
What is an REO?
"REO" stands for Real Estate Owned. These are houses which have been foreclosed upon that the bank or mortgage company presently owns. This is different than a property up for foreclosure auction.
If you buy a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees added during the foreclosure process. You must also be able to pay with cash in hand. To top everything off, you'll accept the property 100% as is. That could involve existing liens and even current tenants that may require removal.
A bank-owned property, conversely, is a much cleaner and attractive transaction. The REO property didn't find a buyer during foreclosure auction. The lender now owns it. The bank will handle the elimination of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.
You should be aware that REOs may be exempt from typical disclosure requirements.
For example, in Nevada, it is optional for foreclosures to have a Property Disclosure Statement,
a document that ordinarily requires sellers to disclose any defects they are knowledgeable of.
By hiring Anita Creasy & Associates, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Are REO properties a bargain in Hillsborough County?
It's frequently believed that any foreclosure must be a good deal and an opportunity for guaranteed profit. This often isn't true. You have to be very careful about buying a REO if your intent is make money. Even though the bank is usually eager to sell it fast, they are also motivated to minimize any losses.
Look closely at the listing and sales prices of competing homes in the neighborhood when making an offer on an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in.
The bargains with money making potential exist, and many people do very well buying foreclosures. However there are also many REOs that are not good buys and not likely to turn a profit.
Time to make an offer?
Most lenders have a department dedicated to REO that you'll work with while buying REO property from them. To get their properties advertised on the local MLS, the lender will often hire a listing agent.
Prior to making your offer, you'll want to contact either the listing agent or REO department at the bank and find out as much as you can about their knowledge regarding the condition of the property and what their process is for getting offers. Since banks usually sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for unknown damage and terminate the offer if you find it.
If, as a buyer, you can provide documentation demonstrating your ability to secure financing, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This is generally true for any type of real estate offer.)
After you've presented your offer, it's customary for the bank to make a counter offer. From there it will be your decision whether to accept their counter, or submit another counter offer.
Be aware, you'll be contending with a process that probably involves several people at the bank, and they don't work evenings or weekends. It's not uncommon for the process of offers and counter offers to take days or even weeks.
Look closely at the listing and sales prices of competing homes in the neighborhood when making an offer on an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in.
The bargains with money making potential exist, and many people do very well buying foreclosures. However there are also many REOs that are not good buys and not likely to turn a profit.
