Purchasing REO property or a foreclosure in Fort Worth?
Investing in a bank-owned property is not something to be taken casually.
What is an REO?
"REO" is Real Estate Owned. These are homes which have been through foreclosure and are currently held by the bank or mortgage company. This is not the same as 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 added during the foreclosure process. The buyer must also be prepared to pay with cash in hand. Finally, you'll accept the property completely as is. That possibly could consist of current liens and even current tenants that need to be expelled.
A bank-owned property, by contrast, is a more tidy and attractive option. The REO property didn't find a buyer during foreclosure auction. The lender now owns it. The bank will attend to 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 Texas, it is optional for foreclosures to have a Property Disclosure Statement,
a document that ordinarily requires sellers to disclose any defects of which they are knowledgeable.
By hiring Megan Phelps, you can rest assured knowing all parties are fulfilling Texas state disclosure requirements.
Are REO properties a bargain in Fort Worth?
It is commonly believed that any REO must be a good deal and a possibility for easy money. This isn't always true. You have to be very careful about buying a repossession if your intent is to make a profit. While it's true that the bank is usually eager to offload it fast, they are also looking to get as much as they can for it.
When contemplating 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.
The bargains with money making potential exist, and many people do very well flipping foreclosures. However, there are also many REOs that are not good buys and may lose money.
Time to make an offer?
Most lenders have staff dedicated to REO that you'll work with when buying REO property from them. Commonly 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 about the condition of the property and what their process is for taking 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 hidden damage and retract the offer if you find it.
As with making any offer on real estate, your offer may be 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 make a counter offer. Then it will be up to you to decide whether to accept their counter, or make another counter offer.
Realize, you'll be dealing with a process that most likely involves a group of 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.