Purchasing REO property or a foreclosure in Tampa?
Just as with any home purchase, your wisest move is to hire a professional real estate agent.
If you have any questions about real estate in Tampa, Florida, call me or send me an e-mail.
What is an REO?
"REO" is an abbreviation for Real Estate Owned. These are properties which have gone through foreclosure that the bank or mortgage company presently holds. This differs from a property 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 added during the foreclosure process. The buyer must also be willing to pay with cash in hand. To top everything off, you'll get the property completely as is. That may involve existing liens and even current denizens that may require eviction.
A bank-owned property, conversely, 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 take care of 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.
Note that REOs may be exempt from standard disclosure requirements.
In California, for example, banks are not required to give a Transfer Disclosure Statement,
a document that ordinarily requires sellers to disclose any defects of which they are aware.
By hiring Keller Williams Realty, Urban Realty Group, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Is REO property in Tampa a bargain?
It is frequently believed that any REO must be a good buy and an opportunity for easy money. This frequently isn't true. You have to be very careful about buying a repossession if your intent is make a profit. While it's true that the bank is often anxious to offload it soon, 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 flipping foreclosures. But there are also many REOs that are not good buys and may not be money makers.
Prepared to make an offer?
Most lenders have staff dedicated to REO that you'll work with in buying REO property from them. Typically the REO department will use a listing agent to get their REO properties listed on the local MLS.
Prior to 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 concerning the condition of the property and what their process is for receiving offers. Since banks almost always sell REO properties "as is", you may want to include an inspection contingency in your offer that gives you time to check for hidden damage and cancel 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. From there it will be up to you to decide whether to accept their counter, or submit another counter offer.
Your transaction might be final in a single 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.
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 flipping foreclosures. But there are also many REOs that are not good buys and may not be money makers.
