Buying REO property or a foreclosure in Fort Wayne?
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 answer questions you have regarding real estate foreclosures.
What is an REO?
"REO" or Real Estate Owned are homes which have been through foreclosure that the bank or mortgage company presently owns. This is not the same as real estate 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 willing to pay with cash in hand. To top everything off, you'll accept the property entirely as is. That possibly could include existing liens and even current occupants that may require expulsion.
A bank-owned property, on the other hand, is a much neater and attractive transaction. The REO property didn't find a buyer during foreclosure auction. The lender now owns it. The lender will attend to 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.
Note that REOs may be exempt from normal disclosure requirements. For instance, in California, banks do not have to give a Transfer Disclosure Statement, a document that usually requires sellers to tell you about any defects they are informed of. By hiring Neal Sherk-North Eastern Group Realty, you can rest assured knowing all parties are fulfilling Indiana state disclosure requirements.
Are REO properties a bargain in Allen County?
It's commonly thought that any REO must be a bargain and a chance for guaranteed profit. This simply isn't true. You have to be very careful about buying a REO if your intent is to make money off of it. While it's true that the bank is usually eager to offload it quickly, they are also looking to get as much as they can for it.
Look closely at the listing and sales prices of comparable properties in the neighborhood when considering the purchase of an REO. And factor in any repairs or upgrades necessary to prepare the house for resale or moving in. It is possible to find REOs with money-making potential, and many people do very well buying foreclosures. However there are also many REOs that are not good buys and may lose money.
All set to make an offer?
Most mortgage companies have staff 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 frequently 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 find out as much as you can about their knowledge regarding the condition of the property and what their process is for getting offers. Since banks most commonly 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 hidden 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 pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This goes for any type of real estate offer.)
Once you've presented your offer, you can expect the bank to make a counter offer. From there it will be up to you to decide whether to accept their counter, or make another counter offer. Understand, you'll be contending with a process that usually involves several people at the bank, and they don't work evenings or weekends. It's not uncommon for there to be days or even weeks of going back and forth.
Look closely at the listing and sales prices of comparable properties in the neighborhood when considering the purchase of an REO. And factor in any repairs or upgrades necessary to prepare the house for resale or moving in. It is possible to find REOs with money-making potential, and many people do very well buying foreclosures. However there are also many REOs that are not good buys and may lose money.