Buying REO property or a foreclosure in Destin?
Foreclosed upon and bank owned property purchases require the assistance of an experience professional.
What's an REO?
"REO" is short for Real Estate Owned. These are properties which have been foreclosed upon and are presently held by the bank or mortgage company. This is not the same as 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 amassed during the foreclosure process. The buyer must also be able to pay with cash in hand. And on top of all that, you'll get the property completely as is. That could consist of prevailing liens and even current residents that may require eviction.
A bank-owned property, on the contrary, is a much cleaner and attractive transaction. The REO property did not find a buyer during foreclosure auction. Now the bank owns it. The lender will deal with 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.
Do be aware that REOs may be exempt from typical disclosure requirements.
For example, in North Carolina, it is optional for foreclosures to have a Property Disclosure Statement,
a document that typically requires sellers to tell you about any defects of which they are informed.
By hiring Mary Anne Windes, broker/owner, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Is REO property in Destin a bargain?
It's sometimes believed that any foreclosure must be a steal and an opportunity for easy money. This isn't always true. You have to be prudent about buying a REO if your intent is to make a profit. While it's true that the bank is typically eager to sell it soon, they are also motivated to get as much as they can for it.
Look carefully at the listing and sales prices of competing properties in the neighborhood when considering the purchase of an REO. And 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 flipping foreclosures. But, there are also many REOs that are not good buys and may not be money makers.
Ready to make an offer?
Most banks have a department 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.
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 their knowledge about the condition of the property and what their process is for receiving offers. Since banks typically sell REO properties "as is", it's often prudent 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 holds for any type of real estate offer.)
After you've presented your offer, you can expect the bank to make a counter offer. At this point it will be up to you to decide whether to accept their counter, or submit another counter offer.
Understand, you'll be working with a process that most likely involves multiple people at the bank, and they don't work evenings or weekends. It's typical for the process of offers and counter offers to take days or even weeks.