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Making an offer on REO property or a foreclosure in Orlando?
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Foreclosed upon and bank owned property purchases require the assistance of an experience professional.
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What's an REO?
"REO" is Real Estate Owned. These are properties which have been through foreclosure that the bank or mortgage company now owns. This differs from a property 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 accumulated during the foreclosure process. You must also be ready to pay with cash in hand. Finally, you'll get the property 100% as is. That possibly could involve standing liens and even current residents that need to be thrown out.
A bank-owned property, conversely, is a much cleaner and attractive option. The REO property didn't find a buyer during foreclosure auction. The bank now owns it. The bank will deal with the elimination of tax liens, evict occupants if needed and generally plan for the issuance of a title insurance policy to the buyer at closing.
Take notice that REOs may be exempt from normal disclosure requirements.
In California, for example, banks are not required to give a Transfer Disclosure Statement,
a document that normally requires sellers to tell you about any defects they are informed of.
By hiring John Hayton, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Am I guaranteed a good deal when investing in a bank owned property in Orlando?
It is frequently assumed that any REO must be a good buy and a possibility for easy money. This isn't necessarily the case. You have to be very careful about buying a repossession if your intent is to make money off of it. While it's true that the bank is usually eager to offload it soon, they are also motivated to get as much as they can for it.
When considering what to pay for a foreclosure, 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.
There are bargains with potential to make money, and many people do very well buying foreclosures. Still there are also many REOs that are not good buys and may lose money.
All set to make an offer?
Most banks have staff dedicated to REO that you'll work with in buying REO property from them. To get their properties advertised on the local MLS, the lender will frequently 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 find out as much as you can about their knowledge concerning the condition of the property and what their process is for accepting offers. Since banks most commonly 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 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 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.
Your transaction might be final in one day, but that's rare. Since offers and counter offers usually allow a day or more for the other party 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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