Buying REO property or a foreclosure in Olympia?
Smart consumers will turn to a seasoned pro when considering a foreclosed property.
What's an REO?
"REO" or Real Estate Owned are properties which have been through foreclosure and are presently possessed by the bank or mortgage company. This is not the same as 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 amassed during the foreclosure process. You must also be willing to pay with cash in hand. Finally, you'll receive the property totally as is. That may include standing liens and even current occupants that may require removal.
A bank-owned property, by contrast, is a much neater and attractive option. The REO property was unable to find a buyer during foreclosure auction. Now the lender owns it. The lender will see 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.
Note that REOs may be exempt from standard disclosure requirements.
For instance, in California, banks are exempt from giving a Transfer Disclosure Statement,
a document that usually requires sellers to disclose any defects they are aware of.
By hiring Weichert Reynolds Real Estate, you can rest assured knowing all parties are fulfilling Washington state disclosure requirements.
Am I guaranteed a good deal when purchasing an REO property in Olympia?
It's occasionally presumed that any foreclosure must be a good deal and a chance for guaranteed profit. This isn't necessarily the case. You have to be very careful about buying a repossession if your intent is to make a profit. Even though the bank is usually anxious to offload it promptly, they are also motivated to minimize any losses.
Look closely at the listing and sales prices of competing homes 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. But, there are also many REOs that are not good buys and not likely to turn a profit.
Prepared to make an offer?
Most banks have staff dedicated to REO that you'll work with when buying REO property from them. Typically 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 find out as much as you can about their knowledge regarding the condition of the property and what their process is for taking offers. Since banks most commonly 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 retract the offer if you find it.
As with making any offer on real estate, providing documentation of your ability to pay may make your offer more attractive, such as a pre-approval letter from a lender.
Once you've made your offer, it's customary for the bank to respond with a counter offer. From there it will be your choice whether to accept their counter, or offer a counter to the counter offer.
Realize, you'll be contending with a process that usually involves a group of people at the bank, and they don't work evenings or weekends. It's not unusual for there to be days or even weeks of negotiating back and forth.