Making an offer on REO property or a foreclosure in Rockledge, Cocoa, Merritt Island or Suntree/Viera?
Savvy consumers will turn to a seasoned pro when considering the purchase of a foreclosed property. Should you have questions about real estate in Central Brevard County, Florida, call me
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What is an REO?
"REO" is Real Estate Owned. These are properties which have gone through foreclosure that the bank or mortgage company now possesses. 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 added during the foreclosure process. You must also be able to pay with cash in hand. And on top of all that, you'll receive the property completely as is. That possibly will consist of standing liens and even current denizens that need to be put out.
A bank-owned property, on the contrary, is a much cleaner and attractive option. The REO property was unable to find a buyer during foreclosure auction. The bank now owns it. The bank will take care of 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.
You should be aware that REOs may be exempt from normal disclosure requirements. For example, in California, banks do not have to give a Transfer Disclosure Statement, a document that ordinarily requires sellers to reveal any defects of which they are aware. By hiring Rahal Real Estate LLC, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Am I assured a bargain when investing in an REO property in Rockledge, Cocoa, Merritt Island or Suntree/Viera?
It's sometimes presumed that any REO must be a bargain and a chance for guaranteed profit. This simply isn't true. You have to be cautious about buying a repossession if your intent is to make money. Even though the bank is typically anxious to sell it promptly, they are also looking to minimize any losses.
Look closely at the listing and sales prices of comparable 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 buying and selling foreclosures. Still, there are also many REOs that are not good buys and not likely to turn a profit.
Prepared to make an offer?
Most lenders have a department dedicated to REO that you'll work with in buying REO property from them. To get their properties advertised on the local MLS, the lender will frequently contract with 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 their knowledge concerning the condition of the property and what their process is for getting 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 hidden damage and withdraw the offer if you find it. If, as a buyer, you can provide documentation proving your ability to pay, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This holds for any type of real estate offer.)
Once you've submitted your offer, you can expect the bank to respond with a counter offer. From there it will be up to you to decide whether to accept their counter, or submit another counter offer. Understand, you'll be contending with a process that generally involves multiple people at the bank, and they don't work evenings or weekends. It's not unusual for the process of offers and counter offers to take days or even weeks.