Buying REO property or a foreclosure in North Port?
Smart consumers will turn to a seasoned pro when considering a foreclosed property.
What's an REO?
"REO" is short for Real Estate Owned. These are properties which have completed the foreclosure process that the bank or mortgage company now possesses. 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 added during the foreclosure process. The buyer must also be prepared to pay with cash in hand. To top everything off, you'll accept the property entirely as is. That possibly could involve prevailing liens and even current denizens that may require removal.
A bank-owned property, conversely, is a much cleaner and attractive proposition. The REO property did not find a buyer during foreclosure auction. Now the lender owns it. The bank will see to 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 California, banks do not have to give a Transfer Disclosure Statement,
a document that usually requires sellers to reveal any defects they are informed of.
By hiring Century 21 Almar & Associates , you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Am I guaranteed a low price when buying an REO property in North Port?
It is frequently believed that any REO must be a good deal and an opportunity for guaranteed profit. This frequently isn't true. You have to be cautious about buying a REO if your intent is to make money. While it's true that the bank is usually eager to offload it fast, they are also motivated to minimize any losses.
Look carefully at the listing and sales prices of comparable 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. However, there are also many REOs that are not good buys and not likely to turn a profit.
Time to make an offer?
Most mortgage companies 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 hire a listing agent.
Before 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 typically 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 unseen damage and cancel 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 type of real estate offer.)
After you've presented your offer, you can expect the bank to counter offer. At this point it will be up to you to decide whether to accept their counter, or make another counter offer.
Be aware, you'll be dealing with a process that usually involves multiple 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.