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Making an offer on REO property or a foreclosure in Edmond?
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Making an offer on a bank-owned property is not something to be taken lightly.
Should you have any questions about real estate in Edmond, Oklahoma, call me or send me an e-mail.
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What's an REO?
"REO" or Real Estate Owned are properties which have completed the foreclosure process and are currently possessed by the bank or mortgage company. This differs from 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. The buyer must also be willing to pay with cash in hand. And on top of all that, you'll receive the property completely as is. That might consist of existing liens and even current occupants that need to be kicked 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 lender owns it. The bank will see to 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 standard disclosure requirements.
In California, for example, banks are exempt from giving a Transfer Disclosure Statement,
a document that usually requires sellers to tell you about any defects of which they are knowledgeable.
By hiring Prudential Alliance Realty Inc., you can rest assured knowing all parties are fulfilling Oklahoma state disclosure requirements.
Is REO property in Edmond a bargain?
It's sometimes believed that any REO must be a good deal and a possibility for guaranteed profit. This simply isn't true. You have to be very careful about buying a repossession if your intent is make a profit. While it's true that the bank is typically eager to sell it quickly, they are also motivated to minimize any losses.
When contemplating 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 lose money.
Ready to make an offer?
Most banks have a department 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 typically use 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 about the condition of the property and what their process is for receiving offers. Since banks almost always 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 unknown damage and cancel the offer if you find it.
As with making any offer on real estate, you'll make your offer more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
After you've presented your offer, you can expect the bank to counter offer. At this point 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 dealing with a process that usually involves several people at the bank, and they don't work evenings or weekends. It's typical for the process of offers and counter offers to take days or even weeks.
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