Purchasing REO property or a foreclosure in Woodinville?
Savvy consumers will turn to a seasoned pro when considering the purchase of a foreclosed property.
For more information, simply contact me through my site or e-mail me. I'm happy to address questions you have about real estate foreclosures.
What is an REO?
"REO" is an abbreviation for Real Estate Owned. These are properties which have completed the foreclosure process that the bank or mortgage company currently holds. This is unlike a property 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 amassed during the foreclosure process. You must also be able to pay with cash in hand. Finally, you'll accept the property entirely as is. That might consist of current liens and even current tenants that need to be removed.
A bank-owned property, by contrast, 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 lender will handle the elimination of tax liens, evict occupants if needed and generally organize for the issuance of a title insurance policy to the buyer at closing.
Note that REOs may be exempt from typical disclosure requirements.
For instance, in California, banks are not required to give a Transfer Disclosure Statement,
a document that normally requires sellers to tell you about any defects they are knowledgeable of.
By hiring Contractor Website Pros.com, you can rest assured knowing all parties are fulfilling Washington state disclosure requirements.
Are REO properties a bargain in King County?
It is commonly thought that any REO must be a bargain and an opportunity for guaranteed profit. This frequently isn't true. You have to be prudent about buying a REO if your intent is make a profit. Even though the bank is typically eager to offload it quickly, they are also motivated to get as much as they can for it.
When pondering the value of 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.
It is possible to find REOs with money-making potential, 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.
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 what they know concerning the condition of the property and what their process is for receiving offers. Since banks most commonly 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 unknown 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 goes for any real estate offer.)
After you've submitted your offer, you can expect the bank to respond with a counter offer. Then it will be your decision whether to accept their counter, or submit another counter offer.
Be aware, you'll be dealing with a process that most likely involves a group of people at the bank, and they don't work evenings or weekends. It's not uncommon for there to be days or even weeks of going back and forth.
When pondering the value of 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.
It is possible to find REOs with money-making potential, 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.
