Purchasing REO property or a foreclosure in Clearwater Beach?
Investing in a bank-owned or foreclosure property has challenges
What is REO?
"REO" stands for Real Estate Owned. These are homes which have been foreclosed upon and are currently owned by the bank or mortgage company. This is unlike real estate 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 added during the foreclosure process. The buyer must also be able to pay with cash in hand. Finally, you'll accept the property completely as is. That might consist of prevailing liens and even current residents that may require removal.
A bank-owned property, on the contrary, is a much cleaner and attractive proposition. The REO property didn't find a buyer during foreclosure auction. Now the bank owns it. The lender will attend to 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.
Take notice that REOs may be exempt from normal disclosure requirements. For example, in North Carolina, it is optional for foreclosures to have a Property Disclosure Statement, a document that normally requires sellers to tell you about any defects of which they are knowledgeable. By hiring CENTURY 21 Coast to Coast, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Are REO properties a bargain in Pinellas County?
It is occasionally believed that any REO must be a good buy and a chance for guaranteed profit. This isn't necessarily 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 often eager to sell it soon, they are also motivated to minimize any losses.
Look closely 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 buying foreclosures. But there are also many REOs that are not good buys and may not be money makers.
Prepared to make an offer?
Most lenders have staff 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 usually hire a listing agent.
Before 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 concerning the condition of the property and what their process is for accepting offers. Since banks typically sell REO properties "as is", you'll want to be sure and include an inspection contingency in your offer that gives you time to check for hidden damage and cancel the offer if you find it. As with making any offer on real estate, you'll make your offer more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
After you've made your offer, it's customary for the bank to respond with a counter offer. From there it will be your choice whether to accept their counter, or submit another counter offer. Your deal could 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.
Contact Us for professional advice on buying bank-owned or foreclosure property.