Making an offer on REO property or a foreclosure in Frankfort?
Foreclosed upon and bank owned property purchases require the assistance of an experience professional.
What's an REO?
"REO" stands for Real Estate Owned. These are houses which have gone through foreclosure that the bank or mortgage company currently owns. This differs from 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. And on top of all that, you'll accept the property 100% as is. That might involve existing liens and even current residents that need to be kicked out.
A bank-owned property, on the other hand, is a much neater and attractive transaction. The REO property didn't find a buyer during foreclosure auction. Now the bank owns it. The lender will attend to 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.
Do be aware that REOs may be exempt from standard disclosure requirements. In California, for example, banks are exempt from giving a Transfer Disclosure Statement, a document that usually requires sellers to tell you about any defects of which they are aware. By hiring Trautner Real Estate & Auction, you can rest assured knowing all parties are fulfilling Kentucky state disclosure requirements.
Are REO properties a bargain in Frankfort?
It's occasionally thought that any REO must be a steal and an opportunity for easy money. This isn't always the case. You have to be prudent about buying a REO if your intent is to make money off of it. Even though the bank is typically anxious to offload it quickly, they are also looking to minimize any losses.
When contemplating what to pay for REO property, 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. 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 lose money.
Time to make an offer?
Most banks have staff dedicated to REO that you'll work with in buying REO property from them. Usually 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 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 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, providing documentation of your ability to secure financing may make your offer more attractive, such as a pre-approval letter from a lender.
Once you've made your offer, it's customary for the bank to counter offer. From there it will be your decision whether to accept their counter, or make another counter offer. Realize, you'll be working with a process that usually involves multiple people at the bank, and they don't work evenings or weekends. It's not unusual for there to be days or even weeks of negotiating back and forth.
Trautner Real Estate & Auction P.O. Box 5347 Frankfort, KY 40602
When contemplating what to pay for REO property, 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. 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 lose money.
