Purchasing REO property or a foreclosure in Mesa?
Purchasing a bank-owned property is not something to be taken lightly.
What is an REO?
"REO" stands for Real Estate Owned. These are homes which have gone through foreclosure that the bank or mortgage company presently holds. 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 accumulated during the foreclosure process. You must also be prepared to pay with cash in hand. Finally, you'll receive the property 100% as is. That may involve standing liens and even current residents that may require eviction.
A bank-owned property, conversely, is a much cleaner and attractive proposition. The REO property was unable to find a buyer during foreclosure auction. The bank now owns it. The bank will attend to the removal 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 standard disclosure requirements.
For example, in Nevada, it is optional for foreclosures to have a Property Disclosure Statement,
a document that ordinarily requires sellers to disclose any defects they are informed of.
By hiring Tom Rizen, you can rest assured knowing all parties are fulfilling Arizona state disclosure requirements.
Are REO properties a bargain in Mesa?
It's frequently thought that any foreclosure must be a good buy and a possibility for guaranteed profit. This isn't always the case. You have to be cautious about buying a REO if your intent is to make money off of it. Even though the bank is typically anxious to sell it fast, they are also looking to minimize any losses.
Look carefully at the listing and sales prices of comparable homes in the neighborhood when considering the purchase of an REO. And factor in any repairs or upgrades necessary to prepare the house for resale or moving in.
There are bargains with potential to make money, 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 banks have a department dedicated to REO that you'll work with in buying REO property from them. Usually 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 find out as much as you can about their knowledge about the condition of the property and what their process is for getting offers. Since banks usually sell REO properties "as is", you may want 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.
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.
After you've made your offer, it's customary for the bank to counter offer. At this point it will be your choice whether to accept their counter, or offer a counter to the counter offer.
Your transaction might be final in one day, but that's rare. 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. R∙A∙N Realty & Property Management is used to working around the schedules of this type of seller and will do everything possible to ensure there are no unnecessary delays.