Making an offer on REO property or a foreclosure in Orlando?
Savvy consumers will turn to a seasoned pro when considering the purchase of a foreclosed property.
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What's an REO?
"REO" means Real Estate Owned. These are homes which have been foreclosed upon that the bank or mortgage company currently holds. This is different than 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 accrued during the foreclosure process. The buyer must also be willing to pay with cash in hand. Finally, you'll accept the property totally as is. That could consist of existing liens and even current residents that may require removal.
A bank-owned property, on the other hand, is a much neater and attractive deal. The REO property did not find a buyer during foreclosure auction. Now the lender owns it. The lender will take care of the removal of tax liens, evict occupants if needed and generally arrange for the issuance of a title insurance policy to the buyer at closing.
Take notice that REOs may be exempt from standard disclosure requirements.
For example, in California, banks are not required to give a Transfer Disclosure Statement,
a document that normally requires sellers to disclose any defects of which they are informed.
By hiring Danny Hilwa P.A., you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Is REO property in Orlando a bargain?
It's frequently thought that any foreclosure must be a good deal and a possibility for easy money. This isn't necessarily true. You have to be cautious about buying a REO if your intent is to profit from the sale. While it's true that the bank is usually eager to sell it fast, they are also looking to minimize any losses.
Look carefully at the listing and sales prices of competing homes 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.
There are bargains with potential to make money, and many people do very well buying foreclosures. But, there are also many REOs that are not good buys and may lose money.
All set to make an offer?
Most banks have a department dedicated to REO that you'll work with when buying REO property from them. To get their properties advertised on the local MLS, the lender will often use 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 about the condition of the property and what their process is for accepting 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 hidden damage and cancel the offer if you find it.
As with making any offer on real estate, your offer may be more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
Once you've made your offer, it's customary for the bank to counter offer. Then it will be up to you to decide whether to accept their counter, or submit another counter offer.
Your deal might be final in a single 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.