Looking for REO property or a foreclosure in Florida?
Savvy consumers will turn to a seasoned pro when considering the purchase of a foreclosed property. For more information, you can contact us through our site or e-mail us. We are happy to answer questions you have about real estate foreclosures.
What is an REO?
"REO" stands for Real Estate Owned. These are properties which have gone through foreclosure and are presently possessed by the bank or mortgage company. This differs from 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. The buyer must also be able to pay with cash in hand. And on top of all that, you'll get the property totally as is. That might include current liens and even current occupants that need to be expelled.
A bank-owned property, by contrast, is a more tidy and attractive deal. The REO property didn't find a buyer during foreclosure auction. The lender now owns it. The bank will take care of the elimination of tax liens, evict occupants if needed and generally organize for the issuance of a title insurance policy to the buyer at closing.
Take notice that REOs may be exempt from typical disclosure requirements. For example, in North Carolina, it is optional for foreclosures to have a Property Disclosure Statement, a document that usually requires sellers to make known any defects of which they are informed. By hiring KAIZEN REALTY PARTNERS, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Is REO property in Florida bargain?
It's sometimes believed that any foreclosure must be a steal and an opportunity for easy money. This isn't always the case. You have to be very careful about buying a repossession if your intent is make a profit. While it's true that the bank is usually anxious to offload it soon, they are also looking to minimize any losses.
Look closely at the listing and sales prices of similar properties in the neighborhood when considering the purchase of an REO. And factor in any repairs or upgrades necessary to prepare the property for resale or moving in. The bargains with money making potential exist, and many people do very well buying and selling foreclosures. Still there are also many REOs that are not good buys and may not be money makers.
Prepared to make an offer?
Most banks have a department dedicated to REO that you'll work with in buying REO property from them. Commonly 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 find out as much as you can about their knowledge regarding the condition of the property and what their process is for taking offers. Since banks almost always sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for unseen damage and terminate the offer if you find it. If, as a buyer, you can provide documentation proving 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 real estate offer.)
After you've made your offer, you can expect the bank to respond with a counter offer. From there it will be your decision whether to accept their counter, or submit another counter offer. Understand, you'll be contending with a process that probably involves multiple people at the bank, and they don't work evenings or weekends. It's not uncommon for the process of offers and counter offers to take days or even weeks.