Making an offer on REO property or a foreclosure in Miltona?
What is an REO?
"REO" or Real Estate Owned are homes which have been foreclosed upon 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 added during the foreclosure process. The buyer must also be prepared to pay with cash in hand. Finally, you'll get the property totally as is. That possibly could consist of current liens and even current occupants that need to be expelled.
A bank-owned property, by contrast, is a more tidy and attractive deal. The REO property did not find a buyer during foreclosure auction. The lender now owns it. The bank will take care of the elimination of tax liens, evict occupants if needed and generally arrange for the issuance of a title insurance policy to the buyer at closing.
Do be aware that REOs may be exempt from typical disclosure requirements. For example, in Texas, 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 Exit Minnesota Lakes Realty, you can rest assured knowing all parties are fulfilling Minnesota state disclosure requirements.
Is REO property in Miltona a bargain?
It is occasionally presumed that any foreclosure must be a steal and a possibility for easy money. This simply isn't true. You have to be cautious about buying a REO if your intent is to make a profit. Even though the bank is typically eager to offload 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. It is possible to find REOs with money-making potential, and many people do very well flipping foreclosures. Still, there are also many REOs that are not good buys and may lose money.
Prepared to make an offer?
Most banks have a department 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 contract with 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 about the condition of the property and what their process is for taking offers. Since banks usually sell REO properties "as is", it may be in your best interest to include an inspection contingency in your offer that gives you time to check for unknown damage and cancel the offer if you find it. As with making any offer on real estate, you'll make your offer more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
Once you've submitted your offer, you can expect the bank to counter offer. Then it will be your choice whether to accept their counter, or make another counter offer. Be aware, you'll be working with a process that probably involves a group of people at the bank, and they don't work evenings or weekends. It's not unusual for the process of offers and counter offers to take days or even weeks.