Purchasing REO property or a foreclosure in St. Louis?
Just as with any property purchase, your wisest move is to hire a professional real estate agent.
For more information, you can contact me through my site or e-mail me. I'm glad to answer questions you have about real estate foreclosures.
What's an REO?
"REO" or Real Estate Owned are homes which have been foreclosed upon that the bank or mortgage company now owns. 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. The buyer must also be able to pay with cash in hand. Finally, you'll get the property completely as is. That possibly could include current liens and even current tenants that may require removal.
A bank-owned property, on the contrary, is a much neater and attractive deal. The REO property was unable to find a buyer during foreclosure auction. Now the lender owns it. The bank will deal with 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 typical disclosure requirements.
In California, for example, banks are exempt from giving a Transfer Disclosure Statement,
a document that ordinarily requires sellers to disclose any defects they are informed of.
By hiring Keller Williams Chesterfield, you can rest assured knowing all parties are fulfilling Missouri state disclosure requirements.
Am I assured a low price when buying a bank owned property in St. Louis?
It's commonly believed that any foreclosure must be a good deal and a possibility for easy money. This isn't necessarily true. You have to be cautious about buying a REO if your intent is make a profit. Even though the bank is typically anxious to sell it quickly, they are also motivated to minimize any losses.
When contemplating the value of REO property, you need to look closely at 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.
There are bargains with potential to make money, and many people do very well flipping foreclosures. However there are also many REOs that are not good buys and may lose money.
Ready to make an offer?
Most mortgage companies 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.
Before 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 their knowledge regarding 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 terminate the offer if you find it.
As with making any offer on real estate, you'll make your offer more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
After you've made your offer, it's customary for the bank to respond with a counter offer. At this point it will be up to you to decide whether to accept their counter, or submit another counter offer.
Your deal might be settled in one day, but that's rare. 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. Keller Williams Chesterfield is are used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.
Melanie Cooper Team 16650 Chesterfield Grove Rd. Suite 200 Chesterfield, MO 63005
When contemplating the value of REO property, you need to look closely at 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.
There are bargains with potential to make money, and many people do very well flipping foreclosures. However there are also many REOs that are not good buys and may lose money.
