Purchasing REO property or a foreclosure in Miami?
Smart consumers will turn to a seasoned pro when considering a foreclosed property.
Should you have questions regarding real estate in Miami, Florida, call me or send me an e-mail.
What is an REO?
"REO" or Real Estate Owned are homes which have been through foreclosure and are currently possessed by the bank or mortgage company. This is unlike 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 accumulated during the foreclosure process. You must also be prepared to pay with cash in hand. To top everything off, you'll receive the property totally as is. That could involve existing liens and even current tenants that need to be thrown out.
A bank-owned property, by contrast, is a much neater and attractive option. The REO property didn't find a buyer during foreclosure auction. The bank now owns it. The lender will handle the removal of tax liens, evict occupants if needed and generally plan for the issuance of a title insurance policy to the buyer at closing.
You should be aware that REOs may be exempt from typical disclosure requirements.
For instance, in California, banks do not have to give a Transfer Disclosure Statement,
a document that typically requires sellers to tell you about any defects they are informed of.
By hiring Keller Williams Realty, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Is REO property in Miami a bargain?
It is sometimes thought that any foreclosure must be a steal and a possibility for guaranteed profit. This isn't always the case. You have to be cautious about buying a repossession if your intent is make money. Even though the bank is usually anxious to offload it soon, they are also motivated to get as much as they can for it.
Look closely at the listing and sales prices of similar properties in the neighborhood when considering the purchase of an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in.
There are bargains with potential to make money, and many people do very well buying and selling foreclosures. Still there are also many REOs that are not good buys and may not be money makers.
All set to make an offer?
Most banks have a department dedicated to REO that you'll work with when buying REO property from them. Usually 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 their knowledge about the condition of the property and what their process is for accepting offers. Since banks usually sell REO properties "as is", you may want to include an inspection contingency in your offer that gives you time to check for hidden 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 made your offer, you can expect the bank to respond with a counter offer. From there it will be up to you to decide whether to accept their counter, or make another counter offer.
Your deal could be settled in a single 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.
* MOL = More or Less
Keller Williams Realty 700 NE 90 ST Miami, FL 33138
Look closely at the listing and sales prices of similar properties in the neighborhood when considering the purchase of an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in.
There are bargains with potential to make money, and many people do very well buying and selling foreclosures. Still there are also many REOs that are not good buys and may not be money makers.
