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Making an offer on REO property or a foreclosure in Edmond?
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Just as with any home purchase, your wisest move is to hire a professional real estate agent.
For more information, you can contact me through my site or e-mail me. I'm happy to address any questions you have about real estate foreclosures.
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What is an REO?
"REO" stands for Real Estate Owned. These are homes which have been foreclosed upon and are presently owned by the bank or mortgage company. 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 ready to pay with cash in hand. Finally, you'll get the property entirely as is. That could comprise of current liens and even current occupants that need to be kicked out.
A bank-owned property, on the other hand, is a much cleaner and attractive deal. The REO property didn't find a buyer during foreclosure auction. The lender now owns it. The bank will handle the elimination 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 normal disclosure requirements.
In California, for example, banks are exempt from giving a Transfer Disclosure Statement,
a document that normally requires sellers to make known any defects they are informed of.
By hiring Kelly Crotts / Paradigm Advantedge, you can rest assured knowing all parties are fulfilling Oklahoma state disclosure requirements.
Is REO property in Edmond a bargain?
It's frequently thought that any foreclosure must be a bargain and a possibility for easy money. This often isn't true. You have to be very careful about buying a REO if your intent is to make money off of it. Even though the bank is usually anxious to offload it quickly, they are also looking to get as much as they can for it.
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 buying 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 in buying REO property from them. Commonly 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 their knowledge concerning the condition of the property and what their process is for accepting offers. Since banks typically 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 cancel the offer if you find it.
If, as a buyer, you can provide documentation proving 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 is generally true for any real estate offer.)
After you've made your offer, it's customary for the bank to counter offer. Then it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer.
Your deal could be settled 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. Kelly Crotts / Paradigm Advantedge is accustomed to these situations and will work to ensure there are no unnecessary delays.
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