Making an offer on REO property or a foreclosure in Avondale?
|Savvy consumers will turn to a seasoned pro when considering the purchase of a foreclosed property. If you have any questions about real estate in Avondale, Arizona, call me or send me an e-mail.|
What is an REO?"REO" means Real Estate Owned. These are houses which have been through foreclosure and are presently owned by the bank or mortgage company. This is unlike a property 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 accumulated during the foreclosure process. The buyer must also be able to pay with cash in hand. Finally, you'll get the property 100% as is. That might include existing liens and even current residents that may require removal.
A bank-owned property, on the other hand, is a much cleaner and attractive option. The REO property didn't find a buyer during foreclosure auction. The lender now owns it. The bank 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.
Note that REOs may be exempt from typical disclosure requirements. In California, for example, banks are exempt from giving a Transfer Disclosure Statement, a document that ordinarily requires sellers to reveal any defects they are aware of. By hiring Rosendy Wheelock with Arizona Premier Realty Homes & Land, LLC, you can rest assured knowing all parties are fulfilling Arizona state disclosure requirements.
Are REO properties a bargain in Maricopa County?It's occasionally thought that any REO must be a steal and a possibility for guaranteed profit. This isn't always true. You have to be very careful about buying a REO if your intent is make money. While it's true that the bank is often eager to offload it quickly, they are also motivated to get as much as they can for it.
Look closely at the listing and sales prices of comparable homes 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. The bargains with money making potential exist, and many people do very well buying and selling 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 a department dedicated to REO that you'll work with while buying REO property from them. Commonly the REO department will use a listing agent to get their REO properties listed on the local MLS.
Before 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 concerning the condition of the property and what their process is for accepting offers. Since banks almost always sell REO properties "as is", it may be in your best interest to include an inspection contingency in your offer that gives you time to check for hidden damage and cancel the offer if you find it. As with making any offer on real estate, your offer may be more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
Once you've submitted your offer, it's customary for the bank to counter offer. From there it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer. Be aware, you'll be dealing with a process that usually involves a group of 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.