Purchasing REO property or a foreclosure in Sun City West?
Savvy consumers will turn to a seasoned pro when considering a foreclosed property.
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What's an REO?
"REO" means Real Estate Owned. These are homes which have been through foreclosure and are presently held 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 accumulated during the foreclosure process. You must also be prepared to pay with cash in hand. And on top of all that, you'll get the property 100% as is. That might comprise of current liens and even current residents that need to be removed.
A bank-owned property, on the other hand, is a more tidy and attractive option. The REO property didn't 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 arrange for the issuance of a title insurance policy to the buyer at closing.
You should be aware that REOs may be exempt from standard disclosure requirements.
For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement,
a document that normally requires sellers to make known any defects they are informed of.
By hiring RE/MAX Professionals, you can rest assured knowing all parties are fulfilling Arizona state disclosure requirements.
Is REO property in Sun City West a bargain?
It's commonly assumed that any foreclosure must be a bargain and a possibility for easy money. This isn't always true. You have to be cautious about buying a repossession if your intent is to profit from the sale. Even though the bank is typically eager to offload it quickly, they are also looking to minimize any losses.
Look carefully at the listing and sales prices of similar properties in the neighborhood when making an offer on an REO. And factor in any repairs or upgrades necessary to prepare the house for resale or moving in.
It is possible to find REOs with money-making potential, and many people do very well flipping foreclosures. But, there are also many REOs that are not good buys and may not be money makers.
Time to make an offer?
Most lenders 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 discover 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", you'll want to be sure and 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, your offer may be more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
Once you've made your offer, you can expect the bank to counter offer. At this point it will be up to you to decide whether to accept their counter, or make another counter offer.
Your deal could be settled in a single day, but that's usually not the case. Since offers and counter offers usually give the other party a day or longer to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer.