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Making an offer on REO property or a foreclosure in Austin?
Just as with any property purchase, your smartest move is to hire a professional real estate agent. Should you have questions regarding real estate in Austin, Texas,
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What's an REO?
"REO" or Real Estate Owned are houses which have completed the foreclosure process that the bank or mortgage company now owns. This is unlike 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 accumulated during the foreclosure process. You must also be ready to pay with cash in hand. And on top of all that, you'll accept the property totally as is. That could include current liens and even current denizens that may require removal.
A bank-owned property, by contrast, is a much cleaner and attractive proposition. The REO property did not find a buyer during foreclosure auction. The lender now 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.
Do be aware that REOs may be exempt from normal disclosure requirements. For example, in Nevada, it is optional for foreclosures to have a Property Disclosure Statement, a document that normally requires sellers to make known any defects of which they are aware. By hiring Westbank Realty, you can rest assured knowing all parties are fulfilling Texas state disclosure requirements.
Are REO properties a bargain in Travis County?
It's sometimes thought that any foreclosure must be a good deal and a possibility for guaranteed profit. This isn't necessarily true. You have to be cautious about buying a repossession if your intent is profit from the sale. Even though the bank is typically eager to sell it fast, they are also looking to minimize any losses.
When considering the value of REO property, 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. It is possible to find REOs with money-making potential, and many people do very well buying and selling foreclosures. But there are also many REOs that are not good buys and may not be money makers.
Ready to make an offer?
Most lenders have staff 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 typically hire a listing agent.
Before 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 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 unseen damage and cancel the offer if you find it. As with making any offer on real estate, providing documentation showing your ability to pay may make your offer more attractive, such as a pre-approval letter from a lender.
After you've made your offer, it's customary for the bank to make a counter offer. At this point it will be your choice whether to accept their counter, or make another counter offer. Your transaction might be final in a single 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.