Purchasing REO property or a foreclosure in Little Rock?
Smart consumers will turn to a seasoned pro when considering a foreclosed property.
For more information, just contact me through my site or e-mail me. I'm glad to answer any questions you have regarding real estate foreclosures.
What is an REO?
"REO" or Real Estate Owned are houses which have gone through foreclosure that the bank or mortgage company now possesses. This is unlike 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 amassed during the foreclosure process. You must also be willing to pay with cash in hand. To top everything off, you'll accept the property entirely as is. That may consist of existing liens and even current occupants that need to be thrown out.
A bank-owned property, on the contrary, is a much neater and attractive option. The REO property didn't find a buyer during foreclosure auction. Now the bank owns it. The bank will take care of 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.
You should be aware that REOs may be exempt from typical disclosure requirements.
For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement,
a document that usually requires sellers to reveal any defects of which they are knowledgeable.
By hiring trammell & Co. Realtors, you can rest assured knowing all parties are fulfilling Arkansas state disclosure requirements.
Are REO properties a bargain in Pulaski County?
It is commonly presumed that any foreclosure must be a bargain and a chance for easy money. This isn't necessarily the case. You have to be very careful about buying a REO if your intent is to make money off of it. Even though the bank is often eager to sell it fast, they are also motivated to get as much as they can for it.
Look carefully at the listing and sales prices of comparable homes in the neighborhood when making an offer on an REO. And factor in any repairs or upgrades 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 and selling foreclosures. But there are also many REOs that are not good buys and may lose money.
Ready to make an offer?
Most lenders have staff dedicated to REO that you'll work with in buying REO property from them. Commonly the REO department will use a listing agent to get their REO properties listed on the local MLS.
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 their knowledge regarding the condition of the property and what their process is for accepting 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 retract the offer if you find it.
As with making any offer on real estate, you'll make your offer more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
After you've submitted 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 make another counter offer.
Understand, 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 the process of offers and counter offers to take days or even weeks. trammell & Co. Realtors is accustomed to these situations and will work to ensure there are no undue delays.
Look carefully at the listing and sales prices of comparable homes in the neighborhood when making an offer on an REO. And factor in any repairs or upgrades 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 and selling foreclosures. But there are also many REOs that are not good buys and may lose money.
