Making an offer on REO property or a foreclosure in Salida?
Foreclosed upon and bank owned property purchases require the assistance of an experience professional.
What's an REO?
"REO" or Real Estate Owned are homes which have been foreclosed upon and are presently possessed by the bank or mortgage company. This is unlike 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. You must also be prepared to pay with cash in hand. And on top of all that, you'll get the property 100% as is. That might involve existing liens and even current tenants that may require eviction.
A bank-owned property, on the contrary, is a more tidy and attractive proposition. The REO property didn't find a buyer during foreclosure auction. Now the lender owns it. The bank will deal with the removal of tax liens, evict occupants if needed and generally plan for the issuance of a title insurance policy to the buyer at closing.
Note that REOs may be exempt from standard disclosure requirements. For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement, a document that ordinarily requires sellers to tell you about any defects they are informed of. By hiring Barbara Pearson-Sawyer, GRI, you can rest assured knowing all parties are fulfilling Colorado state disclosure requirements.
Is REO property in Salida a bargain?
It is sometimes presumed that any foreclosure must be a good deal and a possibility for easy money. This isn't always the case. You have to be cautious about buying a REO if your intent is to make a profit. Even though the bank is often anxious to sell it quickly, they are also looking to get as much as they can for it.
When considering the value of REO property, you need to look closely at 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.
All set to make an offer?
Most banks have a department dedicated to REO that you'll work with in buying REO property from them. Typically 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 learn as much as you can about what they know about the condition of the property and what their process is for getting offers. Since banks almost always sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for hidden damage and withdraw the offer if you find it. If, as a buyer, you can provide documentation showing 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, you can expect the bank to respond with a counter offer. Then it will be up to you to decide whether to accept their counter, or submit another counter offer. Be aware, 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 not uncommon for the process of offers and counter offers to take days or even weeks. Barbara Pearson-Sawyer, GRI is accustomed to these situations and will work to ensure there are no unnecessary delays.