Real Estate Glossary
Donald S. Brown
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The Debt Forgiveness
Seller Paid Closing
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Reasons Homes Don't Sell
Short Sale Seller
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Looking for REO property or a foreclosure in Lake Worth?
Investing in a bank-owned property is not something to be taken casually. If you have questions about real estate in Lake Worth, Florida,
send me an e-mail
What's an REO?
"REO" is Real Estate Owned. These are homes which have been foreclosed upon that the bank or mortgage company currently holds. This is unlike 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 added during the foreclosure process. The buyer must also be prepared to pay with cash in hand. And on top of all that, you'll get the property 100% as is. That may comprise of standing liens and even current tenants that need to be put out.
A bank-owned property, on the other hand, is a much cleaner and attractive transaction. The REO property did not find a buyer during foreclosure auction. Now the bank owns it. The bank will handle the removal of tax liens, evict occupants if needed and generally plan for the issuance of a title insurance policy to the buyer at closing.
Note that REOs may be exempt from standard disclosure requirements. For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement, a document that usually requires sellers to tell you about any defects they are aware of. By hiring Southdale Properties, Inc., you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Is REO property in Lake Worth a bargain?
It is frequently thought that any REO must be a good deal and a possibility for guaranteed profit. This isn't always the case. You have to be very careful about buying a repossession if your intent is profit from the sale. Even though the bank is often anxious to sell it quickly, they are also looking to minimize any losses.
Look carefully at the listing and sales prices of comparable properties in the neighborhood when considering the purchase of 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 and selling foreclosures. Still there are also many REOs that are not good buys and not likely to turn a profit.
Time to make an offer?
Most banks have a department dedicated to REO that you'll work with while buying REO property from them. Normally 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 learn as much as you can about their knowledge concerning the condition of the property and what their process is for accepting offers. Since banks typically 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 hidden damage and retract the offer if you find it. If, as a buyer, you can provide documentation demonstrating 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 made your offer, you can expect the bank to make a counter offer. Then it will be your choice whether to accept their counter, or submit another counter offer. Realize, you'll be dealing with a process that usually involves a group of people at the bank, and they don't work evenings or weekends. It's typical for the process of offers and counter offers to take days or even weeks.