Buying REO property or a foreclosure in Metro Denver?
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What's an REO?"REO" stands for Real Estate Owned. These are properties which have been foreclosed upon that the bank or mortgage company now owns. 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 added during the foreclosure process. The buyer must also be able to pay with cash in hand. Finally, you'll receive the property entirely as is. That possibly may comprise of standing liens and even current denizens that need to be evicted.
A bank-owned property, on the contrary, is a more tidy and attractive transaction. The REO property did not find a buyer during foreclosure auction. The lender now owns it. The bank 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.
Do be aware that REOs may be exempt from typical disclosure requirements. In California, for example, banks are not required to give a Transfer Disclosure Statement, a document that normally requires sellers to tell you about any defects they are informed of. By hiring ReMax Unlimited @ Cherry Creek Reservoir, you can rest assured knowing all parties are fulfilling Colorado state disclosure requirements.
Am I guaranteed a good deal when buying a bank owned property in Metro Denver?It's sometimes believed that any REO must be a good deal and an opportunity for guaranteed profit. This isn't necessarily the case. You have to be cautious about buying a repossession if your intent is profit from the sale. Even though the bank is often anxious to sell it promptly, they are also motivated to minimize any losses.
Look closely 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 foreclosures. Still there are also many REOs that are not good buys and not likely to turn a profit.
Time to make an offer?Most mortgage companies have a department dedicated to REO that you'll work with while buying REO property from them. Commonly 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 their knowledge concerning the condition of the property and what their process is for accepting 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 cancel the offer if you find it. As with making any offer on real estate, you'll make your offer more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
Once you've submitted your offer, it's customary for the bank to counter offer. Then it will be up to you to decide whether to accept their counter, or submit another counter offer. Your deal might be settled in one 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. ReMax Unlimited @ Cherry Creek Reservoir is are used to working around the schedules of this type of seller and will do everything possible to ensure there are no unnecessary delays.