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Buying REO property or a foreclosure in Central Ohio?
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Purchasing a bank-owned property is not something to be taken lightly.
For more information, you can contact me through my site or e-mail me. I'm happy to address any questions you have about real estate foreclosures.
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What is an REO?
"REO" or Real Estate Owned are properties which have been foreclosed upon and are now held by the bank or mortgage company. This is unlike 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 ready to pay with cash in hand. Finally, you'll accept the property entirely as is. That may include existing liens and even current residents that need to be removed.
A bank-owned property, on the other hand, is a much neater and attractive proposition. The REO property didn't find a buyer during foreclosure auction. The bank now owns it. The lender will take care of 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 REOs may be exempt from typical disclosure requirements.
For example, in California, banks do not have to give a Transfer Disclosure Statement,
a document that normally requires sellers to disclose any defects they are knowledgeable of.
By hiring Century21 HomeStar, you can rest assured knowing all parties are fulfilling Ohio state disclosure requirements.
Are REO properties a bargain in Central Ohio?
It is frequently presumed that any foreclosure must be a steal and a chance for guaranteed profit. This isn't always the case. You have to be prudent about buying a REO if your intent is make money. Even though the bank is often eager to sell it promptly, they are also looking to get as much as they can for it.
When pondering what to pay for REO property, 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.
It is possible to find REOs with money-making potential, and many people do very well buying and selling foreclosures. Still there are also many REOs that are not good buys and may lose money.
All set to make an offer?
Most mortgage companies have staff dedicated to REO that you'll work with while buying REO property from them. To get their properties advertised on the local MLS, the lender will typically contract with a listing agent.
Before making your offer, you'll want to contact either the listing agent or REO department at the bank and discover as much as you can about their knowledge concerning the condition of the property and what their process is for getting offers. Since banks typically sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for hidden damage and withdraw 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, it's customary for the bank to respond with a counter offer. Then it will be up to you to decide whether to accept their counter, or make another counter offer.
Your deal might be settled in one day, but that's rare. Since offers and counter offers usually give the other party a day or longer 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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