Purchasing REO property or a foreclosure in Oklahoma City?
Making an offer on a bank-owned property is not something to be taken lightly.
What is an REO?
"REO" is Real Estate Owned. These are houses which have been foreclosed upon that the bank or mortgage company currently owns. This is not the same as a property 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 added during the foreclosure process. The buyer must also be ready to pay with cash in hand. Finally, you'll accept the property totally as is. That possibly will involve standing liens and even current denizens that need to be kicked out.
A bank-owned property, on the other hand, is a much neater and attractive deal. The REO property didn't find a buyer during foreclosure auction. The bank 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.
You should be aware that REOs may be exempt from typical disclosure requirements.
For example, in North Carolina, it is optional for foreclosures to have a Property Disclosure Statement,
a document that typically requires sellers to tell you about any defects they are knowledgeable of.
By hiring The Virtual Real Estate Team, you can rest assured knowing all parties are fulfilling Oklahoma state disclosure requirements.
Are REO properties a bargain in Oklahoma County?
It's frequently presumed that any REO must be a good buy and an opportunity for easy money. This often isn't true. You have to be prudent about buying a repossession if your intent is to make money. While it's true that the bank is typically eager to sell it soon, they are also looking to get as much as they can for it.
When contemplating 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.
The bargains with money making potential exist, and many people do very well buying foreclosures. However, there are also many REOs that are not good buys and not likely to turn a profit.
Prepared to make an offer?
Most mortgage companies have a department dedicated to REO that you'll work with in buying REO property from them. Commonly 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 their knowledge regarding the condition of the property and what their process is for receiving offers. Since banks usually 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 unseen damage and withdraw the offer if you find it.
As with making any offer on real estate, providing documentation proving your ability to pay may make your offer more attractive, such as a pre-approval letter from a lender.
Once you've submitted your offer, you can expect the bank to counter offer. Then it will be your decision whether to accept their counter, or make another counter offer.
Understand, you'll be dealing with a process that generally involves a group of 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.