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Purchasing REO property or a foreclosure in Wilton?
Just as with any property purchase, your wisest move is to hire a professional real estate agent.
What's an REO?
"REO" or Real Estate Owned are houses which have completed the foreclosure process and are presently owned by the bank or mortgage company. This differs from real estate up for foreclosure auction.
If you buy a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees accrued during the foreclosure process. You must also be ready to pay with cash in hand. To top everything off, you'll get the property 100% as is. That possibly could involve existing liens and even current occupants that may require eviction.
A bank-owned property, on the other hand, is a much cleaner and attractive proposition. The REO property did not find a buyer during foreclosure auction. The lender now owns it. The bank will see to the elimination of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.
Take notice that REOs may be exempt from typical disclosure requirements. In California, for example, banks are not required to give a Transfer Disclosure Statement, a document that normally requires sellers to reveal any defects of which they are knowledgeable. By hiring Theresa Blinder & Company, you can rest assured knowing all parties are fulfilling Connecticut state disclosure requirements.
Are REO properties a bargain in Wilton?
It's occasionally presumed that any REO must be a steal and an opportunity for guaranteed profit. This often isn't true. You have to be prudent about buying a REO if your intent is profit from the sale. Even though the bank is often anxious to offload it fast, they are also looking to get as much as they can for it.
When pondering the value of a foreclosure, 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. The bargains with money making potential exist, and many people do very well flipping foreclosures. However there are also many REOs that are not good buys and may lose money.
Time to make an offer?
Most lenders have a department dedicated to REO that you'll work with when buying REO property from them. Usually 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 discover as much as you can about what they know concerning the condition of the property and what their process is for taking 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 unseen damage and retract the offer if you find it. If, as a buyer, you can provide documentation showing your ability to pay, 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.)
Once you've submitted your offer, it's customary for the bank to respond with a counter offer. From there it will be your decision whether to accept their counter, or submit another counter offer. Be aware, you'll be working with a process that most likely involves several people at the bank, and they don't work evenings or weekends. It's quite common for the process of offers and counter offers to take days or even weeks.