"REO" is Real Estate Owned. These are properties which have completed the foreclosure process and arecurrently possessed by the bank or mortgage company. This is unlike real estate 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 prepared to pay with cash in hand. To top everything off, you'll get the property 100% as is. That could involve prevailing liens and even current residents that need to be put out.
A bank-owned property, conversely, is a much neater and attractive transaction. The REO property was unable to find a buyer during foreclosure auction. The bank now owns it. The bank will handle the removal of tax liens, evict occupants if needed and generally organize 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 Texas, it is optional for foreclosures to have a Property Disclosure Statement,
a document that normally requires sellers to tell you about any defects they are knowledgeable of.
By hiring Charles Rutenberg Realty, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Am I guaranteed a bargain when purchasing a bank owned property?
It's frequently presumed that any foreclosure must be a good buy and a possibility for easy money. This often isn't true. You have to be prudent about buying a repossession if your intent is to make a profit. Even though the bank is often eager to offload it promptly, they are also looking to get as much as they can for it.
Look carefully at the listing and sales prices of similar homes 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.
It is possible to find REOs with money-making potential, and many people do very well buying foreclosures. But, there are also many REOs that are not good buys and may not be money makers.
Ready to make an offer?
Most banks have staff dedicated to REO that you'll work with in 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 discover as much as you can about their knowledge about the condition of the property and what their process is for receiving offers. Since banks almost always 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 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 presented your offer, it's customary for the bank to respond with a counter offer. From there it will be your choice whether to accept their counter, or make another counter offer.
Realize, you'll be working with a process that probably involves a group of people at the bank, and they don't work evenings or weekends. It's quite common for the process of offers and counter offers to take days or even weeks. The Sally and David Team is used to working around the schedules of this type of seller and we'll do everything possible to ensure there are no undue delays.