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Buying REO property or a foreclosure in Branson?
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Savvy consumers will turn to a seasoned pro when considering the purchase of a foreclosed property.
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What is an REO?
"REO" or Real Estate Owned are houses which have completed the foreclosure process and are now possessed by the bank or mortgage company. This differs from real estate up for foreclosure auction.
If you buy 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 prepared to pay with cash in hand. And on top of all that, you'll receive the property 100% as is. That might involve prevailing liens and even current denizens that may require eviction.
A bank-owned property, by contrast, is a much cleaner and attractive deal. The REO property was unable to find a buyer during foreclosure auction. Now the lender owns it. The bank 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 typical disclosure requirements.
In California, for example, banks do not have to give a Transfer Disclosure Statement,
a document that typically requires sellers to tell you about any defects they are knowledgeable of.
By hiring Carol Jones Realtors, you can rest assured knowing all parties are fulfilling Missouri state disclosure requirements.
Are REO properties a bargain in Taney County?
It is occasionally presumed that any foreclosure must be a steal and a possibility for guaranteed profit. This isn't always true. You have to be prudent about buying a REO if your intent is profit from the sale. Even though the bank is often anxious to offload it soon, they are also motivated to minimize any losses.
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. However there are also many REOs that are not good buys and may lose money.
Ready to make an offer?
Most lenders have a department dedicated to REO that you'll work with when buying REO property from them. Commonly 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 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", it's often prudent to include an inspection contingency in your offer that gives you time to check for hidden damage and cancel the offer if you find it.
If, as a buyer, you can provide documentation showing 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 holds for any type of real estate offer.)
Once you've made your offer, you can expect the bank to respond with a counter offer. Then it will be your decision whether to accept their counter, or offer a counter to the counter offer.
Be aware, you'll be contending with a process that generally involves multiple people at the bank, and they don't work evenings or weekends. It's not uncommon for the process of offers and counter offers to take days or even weeks. Carol Jones Realtors is accustomed to these situations and will work to ensure there are no unnecessary delays.
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