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Making an offer on REO property or a foreclosure in Winter Park?
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Making an offer on a bank-owned property is not something to be taken casually.
Should you have any questions regarding real estate in Winter Park, Florida, call me or send me an e-mail.
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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 owns. This is different than 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 accrued during the foreclosure process. The buyer must also be willing to pay with cash in hand. And on top of all that, you'll get the property entirely as is. That may comprise of existing liens and even current tenants that need to be expelled.
A bank-owned property, on the contrary, is a much cleaner and attractive option. The REO property was unable to find a buyer during foreclosure auction. Now the bank owns it. The lender will take care of the elimination 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 typical disclosure requirements.
For example, in Nevada, it is optional for foreclosures to have a Property Disclosure Statement,
a document that usually requires sellers to make known any defects of which they are aware.
By hiring Pamela K. Stewart P.A., you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Are REO properties a bargain in Winter Park?
It is frequently thought that any foreclosure must be a good buy and a possibility for easy money. This isn't necessarily the case. 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 often anxious to offload it soon, they are also motivated to get as much as they can for it.
Look closely at the listing and sales prices of competing homes in the neighborhood when considering the purchase of an REO. And factor in any repairs or remodeling 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.
Time to make an offer?
Most lenders have staff dedicated to REO that you'll work with when buying REO property from them. Normally the REO department will use a listing agent to get their REO properties listed on the local MLS.
Prior to making your offer, you'll want to contact either the listing agent or REO department at the bank and find out as much as you can about what they know about the condition of the property and what their process is for receiving offers. Since banks typically sell REO properties "as is", you may want to include an inspection contingency in your offer that gives you time to check for unknown damage and withdraw the offer if you find it.
If, as a buyer, you can provide documentation showing your ability to pay, 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 type of real estate offer.)
After you've presented your offer, you can expect the bank to respond with a counter offer. Then it will be up to you to decide whether to accept their counter, or submit another counter offer.
Your transaction might 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.
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