Purchasing REO property or a foreclosure in Punta Gorda?
Purchasing a bank-owned property is not something to be taken lightly. If you have any questions regarding real estate in Punta Gorda, Florida, call me or send me an e-mail.
What's an REO?
"REO" stands for Real Estate Owned. These are houses which have been foreclosed upon that the bank or mortgage company presently holds. This differs from real estate 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 accrued during the foreclosure process. You must also be prepared to pay with cash in hand. To top everything off, you'll receive the property totally as is. That might comprise of prevailing liens and even current occupants that need to be removed.
A bank-owned property, by contrast, is a much neater and attractive transaction. The REO property did not find a buyer during foreclosure auction. The bank now owns it. The lender will attend to the removal of tax liens, evict occupants if needed and generally prepare 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 usually requires sellers to make known any defects they are informed of. By hiring Five Star Realty of Charlotte County, Inc, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Are REO properties a bargain in Charlotte County?
It's commonly presumed that any REO must be a good buy and a possibility for guaranteed profit. This simply isn't true. You have to be cautious about buying a repossession if your intent is to make money off of it. Even though the bank is often anxious to offload it promptly, they are also motivated to minimize any losses.
When considering the value of a foreclosure, 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. There are bargains with potential to make money, and many people do very well buying and selling foreclosures. However there are also many REOs that are not good buys and may lose money.
Ready to make an offer?
Most mortgage companies have staff dedicated to REO that you'll work with when buying REO property from them. To get their properties advertised on the local MLS, the lender will frequently contract with a listing agent.
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 getting offers. Since banks usually sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for hidden damage and retract 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 submitted your offer, you can expect the bank to respond with a counter offer. From there it will be up to you to decide whether to accept their counter, or submit another counter offer. Be aware, you'll be dealing 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 going back and forth.
1203 West Marion Ave " Across from Fishermans Village " Punta Gorda, FL 33950 Phone: Toll Free Phone: Cell: Fax:
When considering the value of a foreclosure, 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. There are bargains with potential to make money, and many people do very well buying and selling foreclosures. However there are also many REOs that are not good buys and may lose money.
