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Savvy consumers will turn to a seasoned pro when considering the purchase of a foreclosed property. For more information, simply contact me through my site or e-mail me. I'm glad to address questions you have regarding real estate foreclosures.
"REO" is an abbreviation for Real Estate Owned. These are properties which have been through foreclosure that the bank or mortgage company currently holds. 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 accumulated during the foreclosure process. You must also be able to pay with cash in hand. Finally, you'll accept the property 100% as is. That possibly could comprise of current liens and even current occupants that need to be kicked out.
A bank-owned property, on the other hand, is a much cleaner and attractive option. The REO property didn't find a buyer during foreclosure auction. Now the lender owns it. The bank will take care of 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 California, banks do not have to give a Transfer Disclosure Statement, a document that usually requires sellers to disclose any defects of which they are informed. By hiring Florida Executive Realty, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
It is sometimes assumed that any foreclosure must be a steal and an opportunity for easy money. This often isn't true. You have to be very careful about buying a repossession if your intent is to make a profit. While it's true that the bank is usually anxious to sell it promptly, they are also looking to minimize any losses.
When pondering the value of a foreclosure, 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. The bargains with money making potential exist, 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.
Most banks have a department dedicated to REO that you'll work with when buying REO property from them. Commonly 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 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 most commonly sell REO properties "as is", you may want to include an inspection contingency in your offer that gives you time to check for hidden damage and withdraw 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.
After you've made your offer, you can expect the bank to respond with a counter offer. Then it will be your decision whether to accept their counter, or make another counter offer. Your transaction might be final in one day, but that's rare. Since offers and counter offers usually allow a day or more for the other party to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer.