Buying REO property or a foreclosure in Portland?
Investing in a bank-owned property is not something to be taken casually.
For more information, just contact me
through my site or e-mail me
. I'm glad to address any questions you have about real estate foreclosures.
What's an REO?
"REO" means Real Estate Owned. These are homes which have gone through foreclosure that the bank or mortgage company presently possesses. This differs from 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 amassed during the foreclosure process. You must also be prepared to pay with cash in hand. And on top of all that, you'll accept the property totally as is. That possibly will involve current liens and even current occupants that need to be thrown out.
A bank-owned property, on the contrary, is a much cleaner and attractive option. The REO property did not find a buyer during foreclosure auction. Now the bank owns it. The bank 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.
Note that REOs may be exempt from standard disclosure requirements.
For example, in Nevada, it is optional for foreclosures to have a Property Disclosure Statement,
a document that normally requires sellers to reveal any defects they are informed of.
By hiring Georgetown Realty, you can rest assured knowing all parties are fulfilling Oregon state disclosure requirements.
Are REO properties a bargain in Portland?
It's occasionally assumed that any REO must be a steal and a possibility for easy money. This isn't necessarily the case. You have to be prudent about buying a repossession if your intent is to make money off of it. Even though the bank is often anxious to sell it soon, they are also motivated to get as much as they can for it.
When considering what to pay for a foreclosure, 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 buying and selling foreclosures. However, there are also many REOs that are not good buys and not likely to turn a profit.
All set to make an offer?
Most mortgage companies 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 contract with a listing agent.
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 concerning the condition of the property and what their process is for taking offers. Since banks most commonly 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 withdraw the offer if you find it.
If, as a buyer, you can provide documentation showing 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 is generally true for any real estate offer.)
After you've presented your offer, it's customary for the bank to counter offer. At this point it will be up to you to decide whether to accept their counter, or submit another counter offer.
Your transaction might be final in one day, but that's rare. Since offers and counter offers usually allow a day or more for the other party to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer.