Making an offer on REO property or a foreclosure in Destin?
Making an offer on a bank-owned property is not something to be taken casually.
For more information, just contact me
through my site or e-mail me
. I'm glad to address any questions you have about real estate foreclosures.
What is an REO?
"REO" or Real Estate Owned are houses which have completed the foreclosure process that the bank or mortgage company now holds. This differs from a property 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 amassed during the foreclosure process. The buyer must also be prepared to pay with cash in hand. To top everything off, you'll get the property 100% as is. That might comprise of existing liens and even current tenants that need to be thrown out.
A bank-owned property, by contrast, is a more tidy and attractive transaction. The REO property didn't find a buyer during foreclosure auction. The lender now owns it. The lender will handle 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.
Note that REOs may be exempt from normal disclosure requirements.
In California, for example, banks are not required to give a Transfer Disclosure Statement,
a document that normally requires sellers to make known any defects they are informed of.
By hiring Ben Ward, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Is REO property in Destin a bargain?
It is commonly assumed that any foreclosure must be a good deal and an opportunity for guaranteed profit. This isn't necessarily 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 often anxious to sell it quickly, they are also motivated to get as much as they can for it.
Look closely at the listing and sales prices of similar 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.
The bargains with money making potential exist, and many people do very well flipping foreclosures. But, there are also many REOs that are not good buys and not likely to turn a profit.
Time to make an offer?
Most banks have staff 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 frequently use 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 what they know regarding 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 cancel 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 real estate offer.)
Once you've presented your offer, it's customary for the bank to respond with a counter offer. From there it will be your choice whether to accept their counter, or submit another counter offer.
Realize, you'll be working with a process that probably involves multiple 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. Ben Ward is used to working around the schedules of this type of seller and will do everything possible to ensure there are no unnecessary delays.