Purchasing REO property or a foreclosure in Edmond?
Making an offer on a bank-owned property is not something to be taken casually. If you have any questions about real estate in Edmond, Oklahoma, call me or send me an e-mail.
What's an REO?
"REO" or Real Estate Owned are properties which have completed the foreclosure process 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 added during the foreclosure process. The buyer must also be prepared to pay with cash in hand. To top everything off, you'll accept the property 100% as is. That possibly could consist of standing liens and even current occupants that may require eviction.
A bank-owned property, on the contrary, is a more tidy and attractive transaction. The REO property did not find a buyer during foreclosure auction. Now the lender owns it. The bank will deal with the removal of tax liens, evict occupants if needed and generally organize 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 normally requires sellers to disclose any defects they are informed of. By hiring Dan and Sherrie Furber, you can rest assured knowing all parties are fulfilling Oklahoma state disclosure requirements.
Are REO properties a bargain in Oklahoma County?
It's sometimes thought that any foreclosure must be a bargain and a chance for easy money. This frequently isn't true. You have to be cautious about buying a REO if your intent is to make money off of it. While it's true that the bank is typically eager to offload it fast, they are also looking to minimize any losses.
Look closely at the listing and sales prices of comparable homes 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. The bargains with money making potential exist, and many people do very well buying and selling foreclosures. However there are also many REOs that are not good buys and not likely to turn a profit.
All set to make an offer?
Most lenders have staff dedicated to REO that you'll work with in buying REO property from them. Commonly 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 their knowledge regarding the condition of the property and what their process is for receiving offers. Since banks most commonly 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 terminate the offer if you find it. If, as a buyer, you can provide documentation proving 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.)
Once you've made your offer, you can expect the bank to respond with a counter offer. From there it will be your choice whether to accept their counter, or make another counter offer. Understand, you'll be dealing with a process that generally involves a group of people at the bank, and they don't work evenings or weekends. It's not uncommon for there to be days or even weeks of going back and forth.
Look closely at the listing and sales prices of comparable homes 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. The bargains with money making potential exist, and many people do very well buying and selling foreclosures. However there are also many REOs that are not good buys and not likely to turn a profit.
