Just as with any home purchase, your wisest move is to hire a professional real estate agent.
What's an REO?
"REO" or Real Estate Owned are houses which have completed the foreclosure process and are currently owned by the bank or mortgage company. This is different than 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. You must also be willing to pay with cash in hand. To top everything off, you'll accept the property 100% as is. That possibly could involve current liens and even current occupants that may require eviction.
A bank-owned property, by contrast, is a more tidy and attractive option. The REO property did not find a buyer during foreclosure auction. Now the bank owns it. The bank 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.
Take notice that REOs may be exempt from typical disclosure requirements. For example, in California, banks are exempt from giving a Transfer Disclosure Statement, a document that typically requires sellers to reveal any defects they are knowledgeable of. By hiring RE/MAX New Dimensions, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Am I guaranteed a low price when buying an REO property in Trinity?
It's sometimes assumed that any REO must be a steal and a chance for guaranteed profit. This often isn't true. You have to be prudent about buying a repossession if your intent is profit from the sale. While it's true that the bank is usually anxious to sell it fast, they are also motivated to get as much as they can for it.
Look closely at the listing and sales prices of competing properties in the neighborhood when considering the purchase of an REO. And factor in any repairs or upgrades necessary to prepare the house for resale or moving in. There are bargains with potential to make money, and many people do very well flipping foreclosures. Still there are also many REOs that are not good buys and may lose money.
Prepared to make an offer?
Most lenders 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 learn as much as you can about what they know regarding the condition of the property and what their process is for taking offers. Since banks typically sell REO properties "as is", you may want to include an inspection contingency in your offer that gives you time to check for unknown damage and retract the offer if you find it. If, as a buyer, you can provide documentation demonstrating 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 goes for any type of real estate offer.)
Once you've submitted your offer, it's customary for the bank to counter offer. Then it will be your decision whether to accept their counter, or offer a counter to the counter offer. Understand, you'll be contending 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 there to be days or even weeks of going back and forth. RE/MAX New Dimensions is are used to working around the schedules of this type of seller and will do everything possible to ensure there are no unnecessary delays.
Certifed Residential Specialist
Graduate Realtor Institute
Accredited Buyer's Representative
Accredited Staging Professional
RE/MAX New Dimensions 7801 Mitchell Blvd Trinity, FL 34655
Look closely at the listing and sales prices of competing properties in the neighborhood when considering the purchase of an REO. And factor in any repairs or upgrades necessary to prepare the house for resale or moving in. There are bargains with potential to make money, and many people do very well flipping foreclosures. Still there are also many REOs that are not good buys and may lose money.
Graduate Realtor Institute
