Savvy consumers will turn to a seasoned pro when considering the purchase of a foreclosed property.
What's an REO?
"REO" means Real Estate Owned. These are properties which have completed the foreclosure process that the bank or mortgage company presently holds. This is not the same as 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 accrued during the foreclosure process. You must also be able to pay with cash in hand. Finally, you'll receive the property entirely as is. That might include standing liens and even current denizens that need to be kicked out.
A bank-owned property, conversely, is a much neater and attractive option. The REO property did not find a buyer during foreclosure auction. The bank now owns it. The lender will handle the elimination of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.
Take notice that REOs may be exempt from typical disclosure requirements.
In California, for example, banks do not have to give a Transfer Disclosure Statement,
a document that typically requires sellers to disclose any defects they are aware of.
By hiring Alice Miller and Cathy Miller, Amerivest Realty, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Are REO properties a bargain in Collier County?
It's frequently thought that any foreclosure must be a good deal and a chance for guaranteed profit. This isn't always the case. You have to be prudent about buying a repossession if your intent is to make money off of it. Even though the bank is typically eager to offload it quickly, they are also motivated 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.
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.
Time to make an offer?
Most banks have staff dedicated to REO that you'll work with while buying REO property from them. Normally the REO department will use a listing agent to get their REO properties listed on the local MLS.
Before 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 what they know about the condition of the property and what their process is for taking 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 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.
After you've made your offer, it's customary for the bank to counter offer. At this point it will be your decision whether to accept their counter, or offer a counter to the counter offer.
Realize, you'll be contending with a process that usually involves several people at the bank, and they don't work evenings or weekends. It's not uncommon for there to be days or even weeks of negotiating back and forth.
Compliments of Cathy Miller and Alice Miller, REALTORS® Call today (239) 961-3393 Members; Naples Area Board of REALTORS®, Florida Association of REALTORS®, and National Association of REALTORS®. In association with Amerivest Realty of Naples-10001 Tamiami Trail North, Naples FL 34108 and 500 Fifth Avenue South, Naples FL 34102
Alice Miller and Cathy Miller, Amerivest Realty Amerivest Realty 500 Fifth Ave South Naples, Florida 34102
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.
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.
