Purchasing REO property or a foreclosure in Islamorada?
Just as with any home purchase, your smartest move is to hire a professional real estate agent.
What's an REO?
"REO" or Real Estate Owned are homes which have been foreclosed upon that the bank or mortgage company now possesses. This differs from 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. To top everything off, you'll get the property completely as is. That possibly could consist of standing liens and even current residents that may require eviction.
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. The bank now owns it. The bank will handle the elimination of tax liens, evict occupants if needed and generally plan 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 Nevada, 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 Coastal Realty of the Florida Keys, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Is REO property in Islamorada a bargain?
It's sometimes believed that any REO must be a good deal 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 profit from the sale. While it's true that the bank is typically anxious 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 making an offer on an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in.
It is possible to find REOs with money-making potential, and many people do very well buying foreclosures. But, there are also many REOs that are not good buys and may lose money.
Prepared to make an offer?
Most lenders have a department dedicated to REO that you'll work with while buying REO property from them. Usually 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 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", you may want 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 pay, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This goes for any real estate offer.)
After you've submitted your offer, you can expect 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.
Be aware, you'll be contending with a process that generally involves several people at the bank, and they don't work evenings or weekends. It's quite common for there to be days or even weeks of negotiating back and forth. Coastal Realty of the Florida Keys is used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.