Purchasing REO property or a foreclosure in Harmony?
Making an offer on a bank-owned property is not something to be taken lightly. For more information, simply contact us
through our site or e-mail us
. We're glad to address any questions you have regarding real estate foreclosures.
What's an REO?
"REO" or Real Estate Owned are houses which have completed the foreclosure process that the bank or mortgage company now owns. 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 accumulated during the foreclosure process. You must also be willing to pay with cash in hand. And on top of all that, you'll accept the property entirely as is. That possibly will include existing liens and even current tenants that may require removal.
A bank-owned property, by contrast, is a much cleaner and attractive option. The REO property didn't find a buyer during foreclosure auction. The bank now owns it. The bank will take care of the removal 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. In California, for example, banks are exempt from giving a Transfer Disclosure Statement, a document that typically requires sellers to tell you about any defects they are aware of. By hiring RE/MAX Select Properties, you can rest assured knowing all parties are fulfilling Minnesota state disclosure requirements.
Is REO property in Harmony a bargain?
It is commonly believed that any REO must be a good deal and a possibility for easy money. This simply isn't true. You have to be very careful about buying a REO if your intent is to profit from the sale. Even though the bank is often eager to sell it fast, they are also looking to get as much as they can for it.
When pondering the value of a foreclosure, 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 flipping foreclosures. Still, there are also many REOs that are not good buys and may not be money makers.
All set to make an offer?
Most banks have staff dedicated to REO that you'll work with when 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 find out as much as you can about their knowledge about the condition of the property and what their process is for getting offers. Since banks typically 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 retract the offer if you find it. As with making any offer on real estate, providing documentation of your ability to secure financing may make your offer more attractive, such as a pre-approval letter from a lender.
After you've presented 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 make another counter offer. Be aware, 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 quite common for there to be days or even weeks of going back and forth.