Buying REO property or a foreclosure in Stratford?
Making an offer on a bank-owned property is not something to be taken lightly.
For more information, simply contact us
through our site or e-mail us
. We're happy to address questions you have regarding real estate foreclosures.
What is an REO?
"REO" is Real Estate Owned. These are homes which have completed the foreclosure process and are now possessed by the bank or mortgage company. 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 added during the foreclosure process. The buyer must also be able to pay with cash in hand. To top everything off, you'll get the property totally as is. That may involve standing liens and even current occupants that need to be put out.
A bank-owned property, on the contrary, is a more tidy and attractive proposition. The REO property didn't find a buyer during foreclosure auction. Now the lender owns it. The lender will handle the elimination of tax liens, evict occupants if needed and generally arrange for the issuance of a title insurance policy to the buyer at closing.
Note that REOs may be exempt from normal 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 of which they are knowledgeable.
By hiring Johnson Realty, you can rest assured knowing all parties are fulfilling Oklahoma state disclosure requirements.
Are REO properties a bargain in Stratford?
It is sometimes presumed that any REO must be a steal and a possibility for guaranteed profit. This often isn't true. You have to be very careful about buying a REO if your intent is to make money. Even though the bank is typically eager to sell it quickly, they are also looking to get as much as they can for it.
Look carefully at the listing and sales prices of similar properties 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.
It is possible to find REOs with money-making potential, and many people do very well flipping foreclosures. But, there are also many REOs that are not good buys and may lose money.
Time to make an offer?
Most mortgage companies have staff dedicated to REO that you'll work with while buying REO property from them. Commonly the REO department will use a listing agent to get their REO properties listed on the local MLS.
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 their knowledge concerning 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 hidden damage and terminate 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.
Once you've presented your offer, it's customary for the bank to respond with a counter offer. At this point it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer.
Your deal might be settled 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.