Purchasing REO property or a foreclosure in Moneta?
Investing in a bank-owned property is not something to be taken lightly.
What's an REO?
"REO" or Real Estate Owned are properties which have been through foreclosure and are currently held by the bank or mortgage company. This is not the same as real estate up for foreclosure auction.
When buying 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. The buyer must also be ready to pay with cash in hand. To top everything off, you'll get the property 100% as is. That could consist of standing liens and even current occupants that need to be put out.
A bank-owned property, by contrast, is a much neater and attractive transaction. The REO property was unable to find a buyer during foreclosure auction. The bank now owns it. The bank will take care of 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.
Take notice that REOs may be exempt from normal disclosure requirements.
In California, for example, banks do not have to give a Transfer Disclosure Statement,
a document that typically requires sellers to reveal any defects of which they are knowledgeable.
By hiring Long & Foster Realtors, you can rest assured knowing all parties are fulfilling Virginia state disclosure requirements.
Are REO properties a bargain in Moneta?
It is sometimes assumed that any REO must be a good buy and a chance for guaranteed profit. This simply isn't true. You have to be cautious about buying a repossession if your intent is to make money off of it. While it's true that the bank is typically eager to offload it quickly, they are also looking to minimize any losses.
When contemplating what to pay for REO property, 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. Still there are also many REOs that are not good buys and not likely to turn a profit.
Ready 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 learn as much as you can about what they know concerning the condition of the property and what their process is for getting 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 proving your ability to pay, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This goes for any real estate offer.)
Once you've made your offer, you can expect the bank to make a counter offer. At this point it will be your decision whether to accept their counter, or make another counter offer.
Understand, you'll be working with a process that generally 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. Long & Foster Realtors is 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 contemplating what to pay for REO property, 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. Still there are also many REOs that are not good buys and not likely to turn a profit.
