Interested in REO property or a foreclosure in Austin?
Foreclosed upon and bank owned property purchases require the assistance of an experience professional.
Should you have questions regarding real estate in Austin, Texas, call me or send me an e-mail.
What is an REO?
"REO" means Real Estate Owned. These are homes which have been through foreclosure that the bank or mortgage company presently possesses. 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 accumulated during the foreclosure process. The buyer must also be willing to pay with cash in hand. To top everything off, you'll get the property completely as is. That may comprise of standing liens and even current denizens that need to be put out.
A bank-owned property, on the other hand, is a much neater and attractive proposition. The REO property did not find a buyer during foreclosure auction. Now the lender owns it. The bank will see to the elimination of tax liens, evict occupants if needed and generally organize for the issuance of a title insurance policy to the buyer at closing.
Note that REOs may be exempt from standard disclosure requirements.
For instance, in California, banks are not required to give a Transfer Disclosure Statement,
a document that usually requires sellers to disclose any defects they are informed of.
By hiring Pearl Jones, your Austin Real Estate Professional, you can rest assured knowing all parties are fulfilling Texas state disclosure requirements.
Am I assured a good deal when investing in a bank owned property in Austin?
It is frequently thought that any REO must be a bargain and an opportunity for easy money. This isn't always true. You have to be very careful about buying a REO if your intent is profit from the sale. While it's true that the bank is usually eager to offload it soon, they are also looking to get as much as they can for it.
Look carefully at the listing and sales prices of similar 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 buying and selling foreclosures. However there are also many REOs that are not good buys and not likely to turn a profit.
Time to make an offer?
Most banks have staff dedicated to REO that you'll work with while 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 find out as much as you can about what they know concerning the condition of the property and what their process is for receiving 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 secure financing, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This is generally true for any type of real estate offer.)
After you've submitted your offer, you can expect the bank to make a counter offer. From there it will be your decision whether to accept their counter, or make 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 quite common for there to be days or even weeks of negotiating back and forth.
Look carefully at the listing and sales prices of similar 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 buying and selling foreclosures. However there are also many REOs that are not good buys and not likely to turn a profit.
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