Buying REO property or a foreclosure in Yukon?
Savvy consumers will turn to a seasoned pro when considering the purchase of a foreclosed property.
What's an REO?
"REO" or Real Estate Owned are properties which have been foreclosed upon that the bank or mortgage company now possesses. This differs from 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 amassed during the foreclosure process. You must also be ready to pay with cash in hand. To top everything off, you'll accept the property completely as is. That possibly could include standing liens and even current tenants that may require eviction.
A bank-owned property, conversely, is a more tidy and attractive proposition. The REO property did not find a buyer during foreclosure auction. Now the bank owns it. The lender 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.
Do be aware that REOs may be exempt from normal disclosure requirements. For instance, in California, banks are not required to give a Transfer Disclosure Statement, a document that normally requires sellers to reveal any defects they are aware of. By hiring Metro First Realty, you can rest assured knowing all parties are fulfilling Oklahoma state disclosure requirements.
Is REO property in Yukon a bargain?
It's occasionally thought that any REO must be a good buy and a possibility for easy money. This isn't always the case. You have to be very careful about buying a REO if your intent is to make money. While it's true that the bank is usually eager to offload it soon, they are also motivated to get as much as they can for it.
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 remodeling 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. However, there are also many REOs that are not good buys and may not be money makers.
All set to make an offer?
Most mortgage companies have a department dedicated to REO that you'll work with in buying REO property from them. To get their properties advertised on the local MLS, the lender will often contract with a listing agent.
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 what they know regarding the condition of the property and what their process is for receiving 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 unseen damage and cancel the offer if you find it. As with making any offer on real estate, providing documentation showing your ability to secure financing may make your offer more attractive, such as a pre-approval letter from a lender.
After you've presented your offer, it's customary for the bank to respond with a counter offer. At this point it will be up to you to decide whether to accept their counter, or make another counter offer. Understand, you'll be dealing with a process that usually involves a group of 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.