Purchasing REO property or a foreclosure in AUSTIN?
|Purchasing a bank-owned property is not something to be taken lightly. For more information, you can contact me through my site or e-mail me. I'm glad to answer questions you have about real estate foreclosures.|
What is an REO?"REO" is an abbreviation for Real Estate Owned. These are properties which have gone through foreclosure that the bank or mortgage company presently owns. This is unlike 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. You must also be ready to pay with cash in hand. Finally, you'll receive the property 100% as is. That could consist of prevailing liens and even current residents that may require removal.
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. The lender now owns it. The lender will handle 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 typical disclosure requirements. For example, in Nevada, it is optional for foreclosures to have a Property Disclosure Statement, a document that normally requires sellers to tell you about any defects they are informed of. By hiring Unlimited LTD, you can rest assured knowing all parties are fulfilling Texas state disclosure requirements.
Are REO properties a bargain in AUSTIN?It's occasionally assumed that any foreclosure must be a steal and a possibility for easy money. This isn't always the case. You have to be cautious about buying a REO if your intent is to make money off of it. Even though the bank is often anxious to offload it soon, they are also looking to minimize any losses.
When contemplating what to pay for REO property, carefully analyze comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale. 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.
Prepared to make an offer?Most banks 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 frequently hire a listing agent.
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 their knowledge concerning the condition of the property and what their process is for receiving offers. Since banks usually 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 unseen damage and cancel the offer if you find it. As with making any offer on real estate, providing documentation showing your ability to secure financing may make your offer more attractive, such as a pre-approval letter from a lender.
After you've made your offer, you can expect the bank to respond with a counter offer. Then it will be your decision whether to accept their counter, or offer a counter to the counter offer. Be aware, you'll be contending with a process that most likely involves several people at the bank, and they don't work evenings or weekends. It's not uncommon for the process of offers and counter offers to take days or even weeks.