Buying REO property or a foreclosure in Cape Coral?
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 glad to answer any questions you have about real estate foreclosures.
What is an REO?
"REO" stands for Real Estate Owned. These are homes which have been foreclosed upon and are presently held 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 added during the foreclosure process. The buyer must also be willing to pay with cash in hand. Finally, you'll get the property completely as is. That possibly will involve existing liens and even current occupants that may require expulsion.
A bank-owned property, conversely, is a much cleaner and attractive transaction. The REO property did not find a buyer during foreclosure auction. Now the bank owns it. The lender will deal with the removal of tax liens, evict occupants if needed and generally plan 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 Nevada, it is optional for foreclosures to have a Property Disclosure Statement, a document that normally requires sellers to tell you about any defects of which they are aware. By hiring Pearsall Properties Inc., you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Are REO properties a bargain in Cape Coral?
It's occasionally presumed that any REO must be a good buy 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. While it's true that the bank is usually anxious to offload it quickly, they are also looking to minimize any losses.
When pondering what to pay for REO property, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale. It is possible to find REOs with money-making potential, and many people do very well flipping foreclosures. However, there are also many REOs that are not good buys and may not be money makers.
Ready to make an offer?
Most mortgage companies have staff dedicated to REO that you'll work with when 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 their knowledge about the condition of the property and what their process is for receiving offers. Since banks usually 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 unknown damage and terminate the offer if you find it. As with making any offer on real estate, providing documentation of your ability to pay may make your offer more attractive, such as a pre-approval letter from a lender.
After you've submitted your offer, you can expect the bank to make a counter offer. At this point it will be your decision whether to accept their counter, or make another counter offer. Be aware, you'll be dealing with a process that probably involves multiple 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.