Making an offer on REO property or a foreclosure in Utah?
Making an offer on a bank-owned property is not something to be taken lightly.
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What is an REO?
"REO" means Real Estate Owned. These are homes which have been through foreclosure that the bank or mortgage company now possesses. This differs from real estate 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 accrued during the foreclosure process. You must also be ready to pay with cash in hand. And on top of all that, you'll get the property totally as is. That possibly may involve existing liens and even current tenants that may require eviction.
A bank-owned property, conversely, is a much cleaner and attractive proposition. The REO property did not find a buyer during foreclosure auction. The bank now owns it. The bank 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.
Take notice 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 usually requires sellers to tell you about any defects of which they are informed.
By hiring MOVE Utah Real Estate, you can rest assured knowing all parties are fulfilling Utah state disclosure requirements.
Am I assured a bargain when investing in an REO property in Utah?
It's sometimes thought that any foreclosure must be a good buy and an opportunity for guaranteed profit. This simply isn't true. You have to be prudent about buying a repossession if your intent is to make money. While it's true that the bank is usually anxious to offload it fast, they are also looking to get as much as they can for it.
Look carefully at the listing and sales prices of competing 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.
The bargains with money making potential exist, and many people do very well flipping foreclosures. But, there are also many REOs that are not good buys and may lose money.
Time to make an offer?
Most banks have a department 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 use 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 getting offers. Since banks usually 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, providing documentation proving your ability to pay may make your offer more attractive, such as a pre-approval letter from a lender.
Once you've made 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 make another counter offer.
Understand, you'll be dealing with a process that probably involves several people at the bank, and they don't work evenings or weekends. It's quite common for the process of offers and counter offers to take days or even weeks. MOVE Utah Real Estate is used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.