Looking for REO property or a foreclosure in California, Texas, or Florida?

What is an REO?

"REO" or Real Estate Owned are homes which have gone through foreclosure and are now possessed by the bank or mortgage company. This is not the same as a property 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 accrued during the foreclosure process. The buyer must also be willing to pay with cash in hand. And on top of all that, you'll receive the property completely as is. That could include standing liens and even current tenants that need to be expelled.

A bank-owned property, on the contrary, is a more tidy and attractive proposition. The REO property didn't find a buyer during foreclosure auction. Now the bank owns it. The bank will handle the removal of tax liens, evict occupants if needed and generally organize 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 example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement, a document that ordinarily requires sellers to reveal any defects of which they are aware. By hiring Morris Williams Realty, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.

Am I assured a good deal when purchasing a bank owned property in California, Texas, or Florida?

It is commonly thought that any REO must be a steal and a possibility for easy money. This often isn't true. You have to be prudent about buying a repossession if your intent is to make money off of it. Even though the bank is usually eager to offload it promptly, they are also motivated to minimize any losses.

Look carefully at the listing and sales prices of similar homes in the neighborhood when considering the purchase of an REO. And factor in any repairs or remodeling 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. However, there are also many REOs that are not good buys and not likely to turn a profit.

Prepared to make an offer?

Most banks 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 typically 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 what they know regarding the condition of the property and what their process is for receiving offers. Since banks typically sell REO properties "as is", it may be in your best interest to include an inspection contingency in your offer that gives you time to check for unknown damage and terminate the offer if you find it. As with making any offer on real estate, your offer may be 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, you can expect the bank to make a counter offer. From there it will be your choice whether to accept their counter, or submit another counter offer. Be aware, you'll be dealing with a process that probably involves multiple 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 negotiating back and forth.