Interested in REO property or a foreclosure in Issaquah?
Savvy consumers will turn to a seasoned pro when considering the purchase of a foreclosed property.
What is an REO?
"REO" or Real Estate Owned are homes which have been foreclosed upon and are now possessed by the bank or mortgage company. 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 accrued during the foreclosure process. You must also be prepared to pay with cash in hand. To top everything off, you'll receive the property totally as is. That possibly will involve current liens and even current denizens that may require eviction.
A bank-owned property, on the other hand, is a much cleaner and attractive transaction. The REO property didn't find a buyer during foreclosure auction. Now the bank owns it. The bank will take care of the elimination of tax liens, evict occupants if needed and generally organize for the issuance of a title insurance policy to the buyer at closing.
Do be aware that REOs may be exempt from standard disclosure requirements. For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement, a document that ordinarily requires sellers to reveal any defects of which they are informed. By hiring Realty Executives Evergreen, you can rest assured knowing all parties are fulfilling Washington state disclosure requirements.
Am I guaranteed a low price when investing in an REO property?
It is sometimes assumed that any foreclosure must be a bargain and a possibility for easy money. This isn't necessarily the case. You have to be prudent about buying a REO if your intent is profit from the sale. Even though the bank is usually anxious to offload it fast, they are also motivated to minimize any losses.
Look carefully at the listing and sales prices of similar homes in the neighborhood when making an offer on an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in. The bargains with money making potential exist, and many people do very well flipping foreclosures. But there are also many REOs that are not good buys and may lose money.
Prepared to make an offer?
Most banks have a department 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 frequently use a listing agent.
Prior to making your offer, you'll want to contact a qualified buyer's agent if it is listed or the 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 accepting offers. Since banks typically 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 hidden damage and retract the offer if you find it. If, as a buyer, you can provide documentation demonstrating 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.) If you are making a cash offer, be prepared to bring a verification of the availability of the funds needed to close.
Once you've submitted your offer, it's customary for the bank to make a counter offer, if you are providing a lower than listed offer. From there it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer. Realize, you'll be contending with a process that most likely 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.
Look carefully at the listing and sales prices of similar homes in the neighborhood when making an offer on an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in. The bargains with money making potential exist, and many people do very well flipping foreclosures. But there are also many REOs that are not good buys and may lose money.
