Purchasing REO property or a foreclosure in Orlando?
Smart consumers will turn to a seasoned pro when considering the purchase of a foreclosed property. For more information, you can contact me
through my site or e-mail me
. I'm happy to answer questions you have regarding real estate foreclosures.
What is an REO?
"REO" or Real Estate Owned are houses which have completed the foreclosure process and are currently held by the bank or mortgage company. 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 amassed during the foreclosure process. The buyer must also be ready to pay with cash in hand. And on top of all that, you'll get the property totally as is. That could consist of standing liens and even current occupants that need to be expelled.
A bank-owned property, by contrast, is a more tidy and attractive option. The REO property did not find a buyer during foreclosure auction. The lender now owns it. The bank will attend to the removal of tax liens, evict occupants if needed and generally arrange 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 California, banks are exempt from giving a Transfer Disclosure Statement, a document that ordinarily requires sellers to disclose any defects of which they are informed. By hiring RE/MAX 200 Realty, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Are REO properties a bargain in Winter Park?
It's frequently thought that any REO must be a bargain and a possibility for easy money. This simply isn't true. You have to be cautious about buying a repossession if your intent is to profit from the sale. Even though the bank is usually anxious to sell it soon, they are also motivated to minimize any losses.
Look carefully at the listing and sales prices of competing 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. But, there are also many REOs that are not good buys and may not be money makers.
All set to make an offer?
Most banks have staff dedicated to REO that you'll work with when buying REO property from them. To get their properties advertised on the local MLS, the lender will typically use a listing agent.
Before making your offer, you'll want to contact either the listing agent or REO department at the bank and discover as much as you can about their knowledge regarding the condition of the property and what their process is for getting offers. Since banks typically sell REO properties "as is", you may want to include an inspection contingency in your offer that gives you time to check for hidden damage and retract the offer if you find it. If, as a buyer, you can provide documentation showing 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 holds for any real estate offer.)
After you've made your offer, you can expect the bank to counter offer. Then it will be your choice whether to accept their counter, or offer a counter to the counter offer. Your transaction might be settled in one day, but that's usually not the case. Since offers and counter offers usually allow a day or more for the other party to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer. David is used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.
by David Welch
Orlando Real Estate