Buying Foreclosures & REO's
"REO" or Real Estate Owned are homes which have been foreclosed upon that the bank or mortgage company presently possesses. This is different than real estate 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 accumulated during the foreclosure process. You must also be able to pay with cash in hand. Finally, you'll accept the property 100% as is. That possibly will involve current liens and even current denizens that may require expulsion.
A bank-owned property, on the contrary, is a more tidy and attractive transaction. The REO property was unable to find a buyer during foreclosure auction. The lender now owns it. The lender will handle the removal of tax liens, evict occupants if needed and generally plan for the issuance of a title insurance policy to the buyer at closing.
You should be aware that REOs may be exempt from standard disclosure requirements. In California, for example, banks are not required to give a Transfer Disclosure Statement, a document that usually requires sellers to disclose any defects of which they are knowledgeable. By hiring Farm & Home Real Estate, you can rest assured knowing all parties are fulfilling Kansas state disclosure requirements.
Am I guaranteed a bargain when buying an REO property in Emporia?
It is sometimes assumed that any REO 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 to make money. While it's true that the bank is usually anxious to sell it fast, they are also looking to get as much as they can for it. Look closely at the listing and sales prices of competing properties in the neighborhood when considering the purchase of 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. However, there are also many REOs that are not good buys and may lose money.
Ready to make an offer?
Most lenders have staff dedicated to REO that you'll work with when buying REO property from them. Normally the REO department will use a listing agent to get their REO properties listed on the local MLS. Prior to 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 what they know about 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. 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.) Once you've made your offer, it's customary for the bank to respond with a counter offer. From there it will be your choice whether to accept their counter, or make another counter offer. Your transaction might be final in one day, but that's usually not the case. 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. Farm & Home Real Estate is used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.