Making an offer on REO property or a foreclosure in El Reno?
Investing in a bank-owned property is not something to be taken casually.
What is an REO?
"REO" or Real Estate Owned are homes which have been foreclosed upon and are presently possessed by the bank or mortgage company. This is unlike 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 accumulated during the foreclosure process. You must also be prepared to pay with cash in hand. Finally, you'll accept the property totally as is. That could comprise of current liens and even current denizens that need to be evicted.
A bank-owned property, conversely, is a much cleaner and attractive option. 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 prepare for the issuance of a title insurance policy to the buyer at closing.
Note that REOs may be exempt from normal disclosure requirements.
For instance, in California, banks are not required to give a Transfer Disclosure Statement,
a document that usually requires sellers to disclose any defects of which they are aware.
By hiring Preferred Properties, R.E., you can rest assured knowing all parties are fulfilling Oklahoma state disclosure requirements.
Am I guaranteed a low price when purchasing a bank owned property in El Reno?
It's commonly assumed that any foreclosure must be a steal and a possibility for guaranteed profit. This often isn't true. You have to be prudent about buying a REO if your intent is to make money. Even though the bank is typically anxious to sell it soon, they are also motivated to minimize any losses.
When pondering 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 flipping 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 staff dedicated to REO that you'll work with in buying REO property from them. To get their properties advertised on the local MLS, the lender will often hire 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 regarding the condition of the property and what their process is for taking offers. Since banks typically 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 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 holds for any type of real estate offer.)
Once you've presented your offer, it's customary for the bank to respond with a counter offer. At this point it will be your choice whether to accept their counter, or offer a counter to the counter offer.
Understand, you'll be contending with a process that generally involves multiple 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.