Making an offer on REO property or a foreclosure in Mitchell?
Smart consumers will turn to a seasoned pro when considering the purchase of a foreclosed property.
For more information, just contact us
through our site or e-mail us
. We're happy to answer any questions you have about real estate foreclosures.
What's an REO?
"REO" is an abbreviation for Real Estate Owned. These are homes which have completed the foreclosure process that the bank or mortgage company presently owns. This is different than 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 willing to pay with cash in hand. To top everything off, you'll get the property completely as is. That might include prevailing liens and even current tenants that need to be kicked out.
A bank-owned property, on the other hand, is a more tidy and attractive transaction. The REO property did not find a buyer during foreclosure auction. Now the lender owns it. The lender will handle 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 standard disclosure requirements.
For example, in California, banks are not required to give a Transfer Disclosure Statement,
a document that typically requires sellers to make known any defects of which they are aware.
By hiring Lucas Indiana Realty & Home Services, aka Dogwood Realty Inc, you can rest assured knowing all parties are fulfilling Indiana state disclosure requirements.
Am I assured a good deal when buying an REO property in Mitchell?
It is frequently presumed that any foreclosure must be a bargain and an opportunity for easy money. This isn't always the case. You have to be prudent about buying a REO if your intent is to make money. Even though the bank is often eager to sell it fast, they are also motivated to get as much as they can for it.
Look carefully at the listing and sales prices of competing 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.
The bargains with money making potential exist, and many people do very well buying and selling foreclosures. But, there are also many REOs that are not good buys and not likely to turn a profit.
Time to make an offer?
Most lenders have staff 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 typically use a listing agent.
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 what they know regarding the condition of the property and what their process is for receiving offers. Since banks typically 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 unknown damage and withdraw the offer if you find it.
If, as a buyer, you can provide documentation showing 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.)
Once you've submitted your offer, you can expect the bank to make a counter offer. From there it will be your decision whether to accept their counter, or offer a counter to the counter offer.
Your transaction might be final in one day, but that's usually not the case. 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.