Looking for REO property or a foreclosure in Hampton Roads?
Just as with any home purchase, your wisest move is to hire a professional real estate agent.
For more information, just contact me
through my site or e-mail me
. I'm happy to answer questions you have regarding real estate foreclosures.
What is an REO?
"REO" or Real Estate Owned are properties which have been foreclosed upon and are currently owned by the bank or mortgage company. This is unlike 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 accumulated during the foreclosure process. The buyer must also be prepared to pay with cash in hand. Finally, you'll receive the property totally as is. That possibly will consist of standing liens and even current tenants that need to be kicked out.
A bank-owned property, conversely, is a more tidy and attractive proposition. The REO property was unable to find a buyer during foreclosure auction. Now the bank owns it. The bank will attend to the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.
Note that REOs may be exempt from typical disclosure requirements.
For example, in Texas, 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 aware.
By hiring RE/MAX Coast & Country, you can rest assured knowing all parties are fulfilling Virginia state disclosure requirements.
Are REO properties a bargain in Hampton Roads?
It is sometimes believed that any REO must be a good deal and a possibility for guaranteed profit. This isn't necessarily true. You have to be prudent about buying a REO if your intent is to make money. While it's true that the bank is typically eager to sell it promptly, they are also motivated to get as much as they can for it.
When contemplating 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.
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 not likely to turn a profit.
Time to make an offer?
Most banks 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 about the condition of the property and what their process is for taking 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 unseen damage and withdraw the offer if you find it.
As with making any offer on real estate, providing documentation proving your ability to pay may make your offer more attractive, such as a pre-approval letter from a lender.
Once you've presented your offer, it's customary for the bank to counter offer. Then it will be your choice whether to accept their counter, or offer a counter to the counter offer.
Understand, you'll be dealing with a process that probably involves a group of people at the bank, and they don't work evenings or weekends. It's not unusual for the process of offers and counter offers to take days or even weeks. RE/MAX Coast & Country is used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.