Investing in a bank-owned property is not something to be taken lightly. For more information, simply contact us. We're glad to answer any questions you have regarding real estate foreclosures.
"REO" or Real Estate Owned are homes which have gone through foreclosure that the bank or mortgage company now owns. This differs from real estate up for foreclosure auction.
When buying a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees accumulated during the foreclosure process. You must also be prepared to pay with cash in hand. Finally, you'll get the property entirely as is. That possibly will consist of existing liens and even current tenants that need to be kicked out.
A bank-owned property, by contrast, is a much cleaner and attractive proposition. The REO property did not find a buyer during foreclosure auction. Now the lender owns it. The bank will deal with the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.
Take notice that REOs may be exempt from normal disclosure requirements. For example, in California, banks are exempt from giving a Transfer Disclosure Statement, a document that typically requires sellers to make known any defects of which they are aware. By hiring Premier Group Realty West, you can rest assured knowing all parties are fulfilling Idaho state disclosure requirements.
It's frequently assumed that any REO must be a steal and a possibility for easy money. This simply isn't true. You have to be prudent about buying a repossession if your intent is to make money. While it's true that the bank is typically eager to sell it fast, they are also motivated to get as much as they can for it.
Look carefully at the listing and sales prices of comparable properties in the neighborhood when considering the purchase of an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in. There are bargains with potential to make money, and many people do very well buying and selling foreclosures. Still, there are also many REOs that are not good buys and not likely to turn a profit.
Most lenders have a department dedicated to REO that you'll work with while buying REO property from them. Typically the REO department will use a listing agent to get their REO properties listed on the local MLS.
Prior to making your offer, you'll want to contact either the listing agent or REO department at the bank and learn as much as you can about what they know concerning the condition of the property and what their process is for accepting offers. Since banks most commonly sell REO properties "as is", you'll want to be sure and include an inspection contingency in your offer that gives you time to check for hidden damage and withdraw 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 goes for any real estate offer.)
Once you've made your offer, you can expect the bank to make a counter offer. Then it will be your choice whether to accept their counter, or offer a counter to the counter offer. Be aware, you'll be dealing with a process that usually involves a group of people at the bank, and they don't work evenings or weekends. It's quite common for there to be days or even weeks of negotiating back and forth. Premier Group Realty West is used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.
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