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Purchasing REO property or a foreclosure in Orlando?
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Smart consumers will turn to a seasoned pro when considering a foreclosed property.
Should you have any questions about real estate in Orlando, Florida, call me or send me an e-mail.
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What's an REO?
"REO" or Real Estate Owned are homes which have been foreclosed upon that the bank or mortgage company presently owns. 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. You 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 consist of standing liens and even current occupants that need to be put out.
A bank-owned property, on the contrary, is a more tidy and attractive proposition. The REO property did not find a buyer during foreclosure auction. Now the bank owns it. The bank will see to 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.
Note that REOs may be exempt from standard disclosure requirements.
For example, in California, banks are not required to give a Transfer Disclosure Statement,
a document that ordinarily requires sellers to reveal any defects of which they are informed.
By hiring Watson Realty Corp, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Are REO properties a bargain in Orlando?
It's occasionally thought that any foreclosure must be a bargain and a possibility for easy money. This often isn't true. You have to be cautious about buying a REO if your intent is make money. Even though the bank is often anxious to sell it promptly, they are also motivated to minimize any losses.
When pondering what to pay for REO property, carefully analyze 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.
The bargains with money making potential exist, and many people do very well flipping foreclosures. Still there are also many REOs that are not good buys and may not be money makers.
Prepared to make an offer?
Most banks have staff dedicated to REO that you'll work with when buying REO property from them. To get their properties advertised on the local MLS, the lender will usually hire a listing agent.
Prior to 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 concerning the condition of the property and what their process is for getting offers. Since banks usually sell REO properties "as is", you'll want to be sure and include an inspection contingency in your offer that gives you time to check for unseen damage and withdraw the offer if you find it.
As with making any offer on real estate, your offer may be more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
After you've submitted your offer, it's customary for the bank to make a counter offer. From there it will be your choice whether to accept their counter, or make another counter offer.
Be aware, you'll be working with a process that usually 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.
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Donald Migliore P.A. ABR, CIPS, GRI, SRES, TRC
Residential/Commercial - International Sales
ABR - Accredited Buyer Representive
CIPS - Certified International Property Specialist
GRI - Graduate Realtor Institute
SRES - Senior Real Estate Specialist
TRC - Transnational Referral Certification
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