Buying Foreclosures/REO'sWhat is an REO?"REO" is Real Estate Owned. These are properties which have been through foreclosure that the bank or mortgage company now owns. 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 amassed during the foreclosure process. You must also be prepared to pay with cash in hand. To top everything off, you'll get the property totally as is. That might comprise of standing liens and even current denizens that need to be removed.
A bank-owned property, conversely, is a more tidy and attractive option. The REO property didn't find a buyer during foreclosure auction. Now the lender owns it. The lender will take care of the elimination of tax liens, evict occupants if needed and generally plan for the issuance of a title insurance policy to the buyer at closing.
Do be aware that REOs may be exempt from standard disclosure requirements. For example, in Nevada, it is optional for foreclosures to have a Property Disclosure Statement, a document that typically requires sellers to make known any defects of which they are aware. By hiring Mangrove Realty Exchange, Inc., you can rest assured knowing all parties are fulfilling Florida state disclosure requirements. Search Foreclosures & Short Sales Here Are REO properties a bargain in DELRAY BEACH?It is sometimes assumed that any foreclosure must be a good buy and an opportunity for guaranteed profit. This isn't necessarily true. You have to be very careful about buying a REO if your intent is make money. Even though the bank is often anxious to offload it soon, they are also motivated to get as much as they can for it.
 Look carefully at the listing and sales prices of similar homes in the neighborhood when making an offer on an REO. And factor in any repairs or upgrades 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 foreclosures. But there are also many REOs that are not good buys and may lose money. Prepared 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 frequently hire a listing agent.
Prior to making your offer, you'll want to contact either the listing agent or REO department at the bank and discover as much as you can about their knowledge regarding 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 unseen damage and cancel the offer if you find it. As with making any offer on real estate, providing documentation proving your ability to pay may make your offer more attractive, such as a pre-approval letter from a lender.
Once you've made your offer, you can expect the bank to make a counter offer. At this point it will be your choice whether to accept their counter, or make another counter offer. Be aware, you'll be contending with a process that usually involves a group of people at the bank, and they don't work evenings or weekends. It's not unusual for there to be days or even weeks of going back and forth. | |
