Interested in REO property or a foreclosure in Western Colorado?
Foreclosed upon and bank owned property purchases require the assistance of an experience professional. For more information, simply contact me through my site or e-mail me. I'm happy to answer questions you have about real estate foreclosures.
What's an REO?
"REO" stands for Real Estate Owned. These are properties which have gone through foreclosure and are currently owned by the bank or mortgage company. This is unlike a property 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 prepared to pay with cash in hand. To top everything off, you'll get the property 100% as is. That possibly may include standing liens and even current denizens that need to be removed.
A bank-owned property, on the contrary, is a much neater and attractive option. The REO property did not find a buyer during foreclosure auction. Now the lender owns it. The bank will see to the elimination of tax liens, evict occupants if needed and generally plan for the issuance of a title insurance policy to the buyer at closing.
Take notice that REOs may be exempt from standard disclosure requirements. For example, it is rare for foreclosures to have a Seller's Property Disclosure Statement. That's why Western Colorado Real Estate Brokers insist on a property inspection for our buyers.
Am I assured a bargain when purchasing a bank owned property?
It is frequently presumed that any REO must be a good buy. This isn't necessarily the case. You have to be very careful about buying a repossession; even though the bank is typically anxious to sell it fast, they are also motivated to minimize any losses.
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 needed for the house.
Time to make an offer?
Most banks have a department dedicated to REO that you'll work with in buying REO property from them. Normally the REO department will use a listing agent to get their REO properties listed on the local MLS.
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 unknown damage and terminate 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.
Once you've presented your offer, you can expect the bank to make a counter offer. Then it will be your decision whether to accept their counter, or submit another counter offer. Understand, 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 there to be days or even weeks of going back and forth. Western Colorado Real Estate Brokers are used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.
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 needed for the house.
