Purchasing REO property or a foreclosure in Edmond/OKC Metro?
Purchasing a bank-owned property is not something to be taken lightly.
For more information, you can contact me
at 405-818-3808 or e-mail me
at email@example.com to get answers to your questions.
What is an REO?
"REO" or Real Estate Owned are properties which have gone through foreclosure and are now owned by the bank or mortgage company. This is different than 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 receive the property completely as is. That possibly may involve existing liens and even current occupants that may require removal.
A bank-owned property, on the contrary, is a much neater and attractive option. The REO property did not find a buyer during foreclosure auction. The bank now owns it. The bank will attend to 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 typical disclosure requirements.
For instance, in California, banks are not required to give a Transfer Disclosure Statement,
a document that usually requires sellers to make known any defects of which they are knowledgeable.
By hiring Churchill-Brown, you can rest assured knowing all parties are fulfilling Oklahoma state disclosure requirements.
Am I assured a bargain when investing in an REO property in Edmond?
It's commonly believed that any foreclosure must be a bargain and a chance for easy money. This often isn't true. You have to be prudent about buying a REO if your intent is to profit from the sale. While it's true that the bank is typically anxious to offload it quickly, they are also looking to get as much as they can for it.
Look carefully at the listing and sales prices of competing properties in the neighborhood when making an offer on an REO. Also, factor in any repairs or remodeling necessary to prepare the house for resale or moving in.
There are bargains with potential to make money, and many people do very well buying foreclosures. However, there are also many REOs that are not good buys and not likely to turn a profit.
Prepared to make an offer?
Most mortgage companies have staff 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 usually hire 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 about the condition of the property and what their process is for accepting offers. Since banks usually sell REO properties "as is", you may want 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.
If, as a buyer, you can provide documentation proving your ability to pay, such as a preapproval letter from a lender, your offer will be more attractive and likely be accepted. This is generally true for any type of real estate offer.
After you've made your offer, it's customary for the bank to make a 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. Since offers and counter offers usually give the other party a day or longer to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or even longer. Churchill-Brown is accustomed to these situations and will work to ensure there are no undue delays.