Are You Pre-Approved Yet?

Knowing that you are qualified is not good enough when buying real estate.  You need to take it one step further and get pre-approved before looking at home to get an idea of how much you can afford.

Buying a bank owned property…

There is a lot of interest in buying bank owned properties these days.  Most REOs need repairs and banks usually won’t provide any inspections, so make sure those inspections are alloted in your funds.  After you determine how much it will cost to repair, you will be able to determine if the foreclosure is truly a good buy.  Don’t underestimate the real cost of paint, carpet, landscaping, appliances, light fixtures, mold remediation, dry rot repair, central heat & air, new roof, plumbing, faulty or missing electrical.

What’s an REO…

REO stands for “Real Estate Owned”.  These are properties that have gone through foreclosure and bank or lender has purchased the property back.  An REO is a “cleaner” transaction, in which the bank has removed all the tax liens, evict the occupants and prepare for the issuance of a title insurance policy to the buyer at closing.

It an REO a bargain?

It’s assumed that an REO is a bargain, but it isn’t true.  You need to be careful about purchasing an REO if you intent to make money off of the home.  If you are looking to purchase an REO, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of the repairs and remodeling needed to prepare the house for sale.

Ready to make an offer?

Most banks have an REO department that will work with with you.  Typically the REO department will use a listing agent to their REO departments listed on the local MLS.  Banks usually sell REO properties “as is”, you’ll want to make sure that you include an inspection contingency in your offer to check for hidden damage and terminiate the offer if you find it.

Once an offer is made, you can expect to receive a counter offer.  It will then be up to you to expect the offer or make another counter on this offer.  Expect to not get immediate responses as the offers are only considered on business days, not on weekend.