There is a lot of interest in buying bank owned properties these days. A lot of information, some good and some bad, is floating around about the subject. Often the information offered is for sale, with the promise that you can make a lot of money with little effort once you know "the secret formula". The fact is that there are no secrets, and to make money does require effort.
REO stands for "Real Estate Owned". These are properties that have gone through foreclosure and are now owned by the bank or mortgage company. This is not the same as 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 accumulated during the foreclosure process. You must also be prepared to pay with cash in hand. And on top of all that, you'll receive the property 100% "as is". That could include existing liens and even current occupants that need to be evicted. A REO, by contrast, is a much "cleaner" and attractive transaction. The REO property did not find a buyer during foreclosure auction. The bank now owns it. The bank will see to the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing. Do be aware that REO's may be exempt from normal disclosure requirements. In California, for example, banks are exempt from giving a Transfer Disclosure Statement, a document that normally requires sellers to tell you about any defects they are aware of.
It's commonly assumed that any REO must be a bargain and an opportunity for easy money. This simply isn't true. You have to be very careful about buying a REO if your intent is to make money off of it. While it's true that the bank is typically anxious to sell it quickly, they are also strongly motivated to get as much as they can for it. When considering the value of a REO, you need to look closely at 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. The bargains with money making potential exist, and many people do very well buying foreclosures. But there are also many REO's that are not good buys and not likely to turn a profit.
Ready to make an offer? Almost all banks are listing their REO's with brokers (about 99.99999% of the time) and we'll work with you in buying a REO property from them. Typically the REO departments are using a listing agents (like myself) to get their REO properties listed on the local MLS. Before making your offer, you'll want to contact me and find out as much as you can about the condition of the property and what the process is for putting in offers. Since banks almost always 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 terminate 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, you can expect the bank to make a counter offer. Then it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer. Realize, you'll be dealing with a process that probably 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.
You can always email me if you have any questions at ProRealtor@verizon.net
To find the value of your home with a FREE, over-the-net home HIGHEST Price Analysis, please visit: http://www.newyorkmarketvalue.com/
SEARCH over 50,000 homes online for FREE and be the first to know about HOT NEW LISTINGS before other buyers do, please visit http://www.allnylistings.com/
Disclaimer: The above Real Estate information was provided by Vincent Martinez, Realtor for the #1 Real Estate offices in New York and the #4 office in the USA. Vincent Martinez is a Certified Realtor Short Sale Professional by the Long Island Board of Realtors (L.I.B.O.R.) and a member of Prudential Douglas Elliman - Licensed Real Estate Broker. Vincent Martinez does not guarantee or is any way responsible for the accuracy of the information in this blog post and information provided is without warranties of any kind, either express or implied. Information here represents the opinions and ideas of the author; comments by others may not express the views of the author. How to buy an REO (Foreclosure) Copyright © 2009 By Vincent Martinez, All Rights Reserved.
