Buying REO property or a foreclosure in Orlando?
Smart consumers will turn to a seasoned pro when considering the purchase of a foreclosed property.
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What is an REO?
"REO" is short for Real Estate Owned. These are houses which have gone through foreclosure that the bank or mortgage company presently possesses. This is not the same as 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 amassed during the foreclosure process. The buyer must also be able to pay with cash in hand. Finally, you'll get the property 100% as is. That could include prevailing liens and even current tenants that may require eviction.
A bank-owned property, on the other hand, is a more tidy and attractive proposition. The REO property was unable to find a buyer during foreclosure auction. Now the bank owns it. The bank will see to the elimination of tax liens, evict occupants if needed and generally plan 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 instance, in California, banks do not have to give a Transfer Disclosure Statement,
a document that ordinarily requires sellers to reveal any defects they are knowledgeable of.
By hiring G World Properties, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Is REO property in Orlando a bargain?
It is frequently assumed that any REO must be a good deal and a chance for easy money. This isn't always true. You have to be very careful about buying a repossession if your intent is to profit from the sale. Even though the bank is often anxious to offload it quickly, they are also looking to minimize any losses.
When considering the value of a foreclosure, 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 buying 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 banks have a department dedicated to REO that you'll work with when buying REO property from them. Commonly the REO department will use a listing agent to get their REO properties listed on the local MLS.
Before making your offer, you'll want to contact either the listing agent or REO department at the bank and discover as much as you can about what they know regarding the condition of the property and what their process is for receiving offers. Since banks almost always 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 unseen damage and withdraw the offer if you find it.
If, as a buyer, you can provide documentation proving 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 is generally true for any real estate offer.)
Once you've presented your offer, you can expect the bank to make a counter offer. At this point it will be up to you to decide whether to accept their counter, or make another counter offer.
Your deal could be settled in a single day, but that's rare. 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.