Interested in REO property or a foreclosure in Surprise?
Foreclosed upon and bank owned property purchases require the assistance of an experience professional.
What is an REO?
"REO" or Real Estate Owned are properties which have gone through foreclosure and are now held by the bank or mortgage company. This is not the same as real estate up for foreclosure auction.
If you buy 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. The buyer must also be willing to pay with cash in hand. And on top of all that, you'll accept the property totally as is. That could comprise of current liens and even current denizens that may require expulsion.
A bank-owned property, on the contrary, is a much cleaner and attractive option. The REO property didn't find a buyer during foreclosure auction. Now the bank owns it. The lender will deal with the elimination of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.
You should be aware that REOs may be exempt from normal disclosure requirements.
In California, for example, banks are exempt from giving a Transfer Disclosure Statement,
a document that normally requires sellers to tell you about any defects they are aware of.
By hiring West Valley Living LLC, you can rest assured knowing all parties are fulfilling Arizona state disclosure requirements.
Am I assured a bargain when purchasing an REO property in Surprise?
It's occasionally presumed that any REO must be a good deal and a possibility for easy money. This isn't necessarily the case. You have to be cautious about buying a repossession if your intent is to make money. Even though the bank is typically anxious to sell it promptly, they are also motivated to minimize any losses.
When considering the value of REO property, you need to look closely at 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. However, there are also many REOs that are not good buys and may lose money.
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. To get their properties advertised on the local MLS, the lender will usually use a listing agent.
Prior to 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 getting offers. Since banks typically sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for unknown damage and terminate the offer if you find it.
If, as a buyer, you can provide documentation proving 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 presented your offer, you can expect the bank to respond with a counter offer. Then it will be your choice whether to accept their counter, or offer a counter to the counter offer.
Realize, you'll be dealing with a process that probably involves several people at the bank, and they don't work evenings or weekends. It's typical for there to be days or even weeks of negotiating back and forth.