Interested in REO property or a foreclosure in the Austin area?
Foreclosed upon and bank owned property purchases require the assistance of an experience professional.
What is an REO?
"REO" or Real Estate Owned are properties which have gone through foreclosure that the bank or mortgage company presently owns. This is not the same as real estate 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 accumulated 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 entirely as is. That possibly will involve standing liens and even current occupants that may require removal.
A bank-owned property, by contrast, is a more tidy and attractive transaction. The REO property was unable to find a buyer during foreclosure auction. The bank now owns it. The bank will attend to 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.
Take notice that REOs may be exempt from normal disclosure requirements. For instance, in California, banks do not have to give a Transfer Disclosure Statement, a document that usually requires sellers to tell you about any defects they are knowledgeable of. By hiring Gallagher Realty Co, you can rest assured knowing all parties are fulfilling Texas state disclosure requirements.
Am I assured a low price when buying an REO property in the Austin area?
It is frequently thought that any foreclosure must be a good buy and an opportunity for easy money. This simply isn't true. You have to be very careful about buying a repossession if your intent is to make money. While it's true that the bank is often eager to sell it fast, they are also motivated to get as much as they can for it.
Look closely 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. It is possible to find REOs with money-making potential, and many people do very well flipping foreclosures. Still, there are also many REOs that are not good buys and not likely to turn a profit.
All set to make an offer?
Most lenders have a department dedicated to REO that you'll work with while buying REO property from them. To get their properties advertised on the local MLS, the lender will frequently use 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 their knowledge concerning the condition of the property and what their process is for getting 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 unknown damage and retract 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 holds for any real estate offer.)
Once you've presented your offer, you can expect the bank to respond with a counter offer. At this point it will be your choice whether to accept their counter, or submit another counter offer. Realize, 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 not uncommon for there to be days or even weeks of going back and forth.