Interested in REO property or a foreclosure in Kansas City?
Purchasing 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 happy to address questions you have regarding real estate foreclosures.
What is an REO?
"REO" or Real Estate Owned are properties which have completed the foreclosure process that the bank or mortgage company now owns. This is not the same as 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 willing to pay with cash in hand. Finally, you'll accept the property totally as is. That possibly could comprise of prevailing liens and even current occupants that need to be put out.
A bank-owned property, by contrast, is a much cleaner and attractive transaction. The REO property was unable to find a buyer during foreclosure auction. The bank now owns it. The lender will deal with the elimination of tax liens, evict occupants if needed and generally arrange 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 instance, in California, banks do not have to give a Transfer Disclosure Statement,
a document that typically requires sellers to disclose any defects they are informed of.
By hiring Chartwell Realty, you can rest assured knowing all parties are fulfilling Missouri state disclosure requirements.
Am I assured a low price when investing in a bank owned property in Kansas City?
It's occasionally thought that any REO must be a bargain and a chance for easy money. This isn't necessarily true. You have to be cautious about buying a repossession if your intent is to profit from the sale. While it's true that the bank is usually anxious to offload it soon, they are also motivated to get as much as they can for it.
When contemplating the value of 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.
It is possible to find REOs with money-making potential, and many people do very well flipping foreclosures. Still, there are also many REOs that are not good buys and may lose money.
Ready to make an offer?
Most lenders have a department 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 usually use 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 most commonly sell REO properties "as is", you'll want to be sure and include an inspection contingency in your offer that gives you time to check for unknown damage and cancel the offer if you find it.
If, as a buyer, you can provide documentation demonstrating your ability to pay, 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 type of real estate offer.)
After you've made your offer, it's customary for the bank to make a counter offer. At this point it will be your decision whether to accept their counter, or offer a counter to the counter offer.
Your transaction could be settled in one day, but that's usually not the case. 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.