Making an offer on REO property or a foreclosure in Chesterfield?
Foreclosed upon and bank owned property purchases require the assistance of an experience professional. For more information, you can contact me
through my site or e-mail me
. I'm happy to address any questions you have regarding real estate foreclosures.
What is an REO?
"REO" or Real Estate Owned are homes which have completed the foreclosure process that the bank or mortgage company presently owns. 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 amassed during the foreclosure process. The buyer must also be prepared to pay with cash in hand. And on top of all that, you'll receive the property 100% as is. That possibly could consist of current liens and even current tenants that need to be thrown out.
A bank-owned property, conversely, is a much cleaner and attractive proposition. The REO property was unable to find a buyer during foreclosure auction. The lender now owns it. The lender will deal with the removal of tax liens, evict occupants if needed and generally arrange for the issuance of a title insurance policy to the buyer at closing.
Take notice that REOs may be exempt from standard disclosure requirements. For instance, in California, banks are not required to give a Transfer Disclosure Statement, a document that typically requires sellers to tell you about any defects they are aware of. By hiring RE/MAX Suburban, you can rest assured knowing all parties are fulfilling Missouri state disclosure requirements.
Are REO properties a bargain in Chesterfield?
It's occasionally thought that any foreclosure must be a good deal and a chance for guaranteed profit. This isn't necessarily true. You have to be prudent about buying a repossession if your intent is to profit from the sale. Even though the bank is usually eager to sell it promptly, they are also looking to minimize any losses.
When considering the value of 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. It is possible to find REOs with money-making potential, and many people do very well flipping foreclosures. But, there are also many REOs that are not good buys and may lose money.
All set to make an offer?
Most banks have a department 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 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 discover 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 typically sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for unknown damage and retract the offer if you find it. As with making any offer on real estate, providing documentation showing your ability to secure financing may make your offer more attractive, such as a pre-approval letter from a lender.
After you've presented your offer, you can expect the bank to respond with a counter offer. From there it will be your decision whether to accept their counter, or make another counter offer. Your transaction could be final in a single 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. RE/MAX Suburban is used to working around the schedules of this type of seller and will do everything possible to ensure there are no unnecessary delays.