What is an REO?
"REO" means Real Estate Owned. These are homes which have been foreclosed upon and are now owned by the bank or mortgage company. This is not the same as real estate up for foreclosure auction. The Spies Team has experience to share with foreclosures and bank owned properties in Scottsdale, Arizona
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 ready to pay with cash in hand. Finally, you'll receive the property totally as is. That possibly will include prevailing liens and even current occupants that need to be kicked out.
A bank-owned property, by contrast, is a more tidy and attractive deal. The REO property didn't find a buyer during foreclosure auction. Now the lender owns it. The lender will attend to the elimination of tax liens, evict occupants if needed and generally arrange for the issuance of a title insurance policy to the buyer at closing.
Take notice that REOs may be exempt from normal disclosure requirements. For instance, in California, banks are exempt from giving a Transfer Disclosure Statement, a document that typically requires sellers to disclose any defects of which they are aware. By hiring The Spies Team, you can rest assured knowing all parties are fulfilling Arizona state disclosure requirements.
Are REO properties a bargain in Maricopa County?
It's commonly thought that any REO must be a good deal and a chance for easy money. This isn't necessarily true. You have to be prudent about buying a repossession if your intent is make money. While it's true that the bank is often anxious to offload it soon, they are also looking to get as much as they can for it.
The Spies Team has experience to share with foreclosures and bank owned properties in Scottsdale, Arizona When pondering 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 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 buying and selling foreclosures. But 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 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 concerning the condition of the property and what their process is for accepting offers. Since banks most commonly sell REO properties "as is", it's often prudent 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. If, as a buyer, you can provide documentation demonstrating 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 is generally true for any real estate offer.)
After you've made your offer, it's customary for the bank to respond with a counter offer. Then it will be up to you to decide whether to accept their counter, or make another counter offer. Your deal might be settled in one day, but that's usually not the case. Since offers and counter offers usually allow a day or more for the other party to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer. The Spies Team is accustomed to these situations and will work to ensure there are no undue delays.