Interested in REO property or a foreclosure in Miami?
|Purchasing a bank-owned property is not something to be taken lightly.|
What's an REO?"REO" or Real Estate Owned are houses which have been through foreclosure that the bank or mortgage company now owns. This is different than 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 prepared to pay with cash in hand. Finally, you'll get the property completely as is. That possibly could consist of existing liens and even current denizens that may require removal.
A bank-owned property, conversely, is a much cleaner and attractive proposition. The REO property did not find a buyer during foreclosure auction. Now the bank owns it. The bank will deal with the elimination of tax liens, evict occupants if needed and generally plan 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. For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement, a document that usually requires sellers to tell you about any defects of which they are knowledgeable. By hiring Barreiro's Realty Services, inc., you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Am I guaranteed a bargain when investing in an REO property in Miami?It's commonly assumed that any REO must be a steal and a chance for guaranteed profit. This frequently isn't true. You have to be very careful about buying a repossession if your intent is profit from the sale. While it's true that the bank is usually eager to offload it soon, they are also looking to get as much as they can for it.
When contemplating what to pay for 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. There are bargains with potential to make money, and many people do very well flipping 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 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 often use a listing agent.
Before 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 what they know about the condition of the property and what their process is for getting offers. Since banks almost always sell REO properties "as is", you may want to include an inspection contingency in your offer that gives you time to check for unseen damage and cancel the offer if you find it. As with making any offer on real estate, providing documentation showing your ability to secure financing may make your offer more attractive, such as a pre-approval letter from a lender.
Once you've presented your offer, you can expect the bank to counter offer. Then it will be your decision whether to accept their counter, or submit another counter offer. Your transaction could be settled in one day, but that's rare. 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.