Purchasing REO property or a foreclosure in Saint Louis?
Purchasing a bank-owned property is not something to be taken casually.
What is an REO?
"REO" or Real Estate Owned are homes which have been foreclosed upon and are now held by the bank or mortgage company. 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 added 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 might involve standing liens and even current tenants that need to be put out.
A bank-owned property, by contrast, is a much cleaner and attractive transaction. The REO property did not find a buyer during foreclosure auction. Now the bank owns it. The bank will see to the elimination of tax liens, evict occupants if needed and generally plan for the issuance of a title insurance policy to the buyer at closing.
Note that REOs may be exempt from typical disclosure requirements.
For example, in California, banks do not have to give a Transfer Disclosure Statement,
a document that usually requires sellers to reveal any defects of which they are informed.
By hiring MelanieCooperTeam at MCT Realty, you can rest assured knowing all parties are fulfilling Missouri state disclosure requirements.
Is REO property in Saint Louis a bargain?
It's sometimes presumed that any foreclosure must be a good buy and a chance for easy money. This isn't always true. You have to be cautious about buying a REO if your intent is to profit from the sale. While it's true that the bank is often anxious to sell it soon, they are also looking to get as much as they can for it.
Look carefully at the listing and sales prices of comparable properties in the neighborhood when considering the purchase of an REO. And factor in any repairs or upgrades 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 buying foreclosures. Still, there are also many REOs that are not good buys and may not be money makers.
Prepared to make an offer?
Most lenders have staff dedicated to REO that you'll work with when buying REO property from them. Typically 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 learn as much as you can about their knowledge regarding the condition of the property and what their process is for receiving offers. Since banks almost always 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 withdraw the offer if you find it.
As with making any offer on real estate, providing documentation of your ability to pay may make your offer more attractive, such as a pre-approval letter from a lender.
Once you've submitted your offer, it's customary for the bank to counter offer. Then it will be up to you to decide whether to accept their counter, or submit another counter offer.
Be aware, you'll be working with a process that generally 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. MelanieCooperTeam at MCT Realty is accustomed to these situations and will work to ensure there are no unnecessary delays.