Buying REO property or a foreclosure in Orlando?
Foreclosed upon and bank owned property purchases require the assistance of an experience professional. For more information, you can contact me through my site or e-mail me. I'm happy to answer any questions you have regarding real estate foreclosures.
What's an REO?
"REO" or Real Estate Owned are homes which have completed the foreclosure process and are currently possessed by the bank or mortgage company. This is different than 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 accumulated during the foreclosure process. You must also be prepared to pay with cash in hand. To top everything off, you'll accept the property completely as is. That possibly will involve prevailing liens and even current occupants that need to be expelled.
A bank-owned property, by contrast, is a much cleaner and attractive proposition. The REO property did not find a buyer during foreclosure auction. The bank now owns it. The bank will deal with the elimination of tax liens, evict occupants if needed and generally organize for the issuance of a title insurance policy to the buyer at closing.
Note that REOs may be exempt from normal disclosure requirements. For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement, a document that typically requires sellers to disclose any defects of which they are aware. By hiring Independence Realty Group, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Are REO properties a bargain in Orlando?
It is sometimes thought that any REO must be a good buy and an opportunity for easy money. This simply isn't true. You have to be prudent about buying a repossession if your intent is to make money. Even though the bank is often eager to offload it promptly, they are also looking to minimize any losses.
Look closely at the listing and sales prices of comparable homes in the neighborhood when considering the purchase of an REO. And factor in any repairs or upgrades 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. But, there are also many REOs that are not good buys and may lose money.
Prepared to make an offer?
Most lenders have a department dedicated to REO that you'll work with while buying REO property from them. Commonly the REO department will use a listing agent to get their REO properties listed on the local MLS.
Before 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 receiving 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. As with making any offer on real estate, your offer may be more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
Once you've presented your offer, you can expect the bank to make a counter offer. Then it will be your decision whether to accept their counter, or offer a counter to the counter offer. Understand, you'll be working with a process that most likely involves a group of people at the bank, and they don't work evenings or weekends. It's typical for there to be days or even weeks of going back and forth. Independence Realty Group is accustomed to these situations and will work to ensure there are no unnecessary delays.