Buying REO property or a foreclosure in St Lucie County or Martin County?
Purchasing a bank-owned property is not something to be taken lightly.
What's an REO?
"REO" is an abbreviation for Real Estate Owned. These are homes which have gone through foreclosure and are presently possessed 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 amassed during the foreclosure process. The buyer must also be ready to pay with cash in hand. And on top of all that, you'll get the property completely as is. That possibly may involve standing liens and even current residents that may require removal.
A bank-owned property, on the contrary, is a much neater and attractive proposition. The REO property didn't find a buyer during foreclosure auction. Now the lender owns it. The lender will attend to 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.
Is a REO property a bargain?
It is sometimes believed that any foreclosure must be a steal and an opportunity for guaranteed profit. This frequently isn't true. You have to be prudent about buying a repossession if your intent is to profit from the sale. While it's true that the bank is usually anxious to sell it quickly, they are also looking to get as much as they can for it.
When considering what to pay for a foreclosure, 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. But, there are also many REOs that are not good buys and may not be money makers.
If your intent is to occupy the home and not flip it, we still want to ensure that you do not over pay for the home. Some banks will go in and apply fresh paint, fix broken items, update kitchens, install new appliances, et cetera. They do this to help the home sell quicker and bring them the highest offers possible. This can be a great buy if the price is right.
Time to make an offer?
Most banks have staff dedicated to REO that we'll work with while buying a REO property from them. To get their properties advertised on the local MLS, the lender will typically contract with a listing agent who would also be our main point of contact.
Before making your offer, we'll want to contact either the listing agent or REO department at the bank and discover as much as we can about their knowledge regarding the condition of the property and what their process is for taking offers. Since banks almost always sell REO properties "as is", we'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. Most banks will demand that a Pre-Approval Letter (if financing) or Proof of Funds Letter (if paying cash) is presented with all offers. Some banks will not accept an offer that is contingent upon selling your home. So if you do have a home to sell and you do not already have a contract on it, we'll want to make sure you have the ability to purchase the REO without having to sell your current home.
After we've presented your offer, you can expect 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 submit another counter offer. Understand, you'll be dealing with a process that usually involves several people at the bank, and they don't work evenings or weekends. It's not unusual for the process of offers and counter offers to take days or even weeks. Sawgrass Realty of the Treasure Coast is used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.
If you are interested in looking for Bank Owned Properties in either St Lucie County or Martin County, contact us today at (772) 340-6116 or you can fill out the form below.