Buying REO property or a foreclosure in South Florida?

Foreclosed upon and bank owned property purchases require the assistance of an experienced professional. For more information, you can contact us through our site or e-mail us. We're glad to address any questions you have regarding foreclosures.

What's an REO?

"REO" or Real Estate Owned properties are houses which have completed the foreclosure process and are currently possessed by the bank or mortgage company. 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. You must also be able to pay with cash in hand. Finally, you'll get the property 100% as is. That possibly could include prevailing liens and even current residents that need to be put out.

A bank-owned property, on the contrary, is a more tidy and attractive option. The REO property didn't find a buyer during foreclosure auction. Now the lender owns it. The lender will deal with 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.

Take notice that REOs may be exempt from typical disclosure requirements. For example, in Nevada, it is optional for foreclosures to have a Property Disclosure Statement, a document that usually requires sellers to disclose any defects of which they are informed. By hiring Greater Florida Realty Inc., you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.

Is REO property in South Florida a bargain?

It is commonly thought that any REO must be a steal and a possibility for easy money. This simply isn't true. You have to be cautious about buying a repossession if your intent is to make money off of it. While it's true that the bank is often 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 comparable 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 foreclosures. However, there are also many REOs that are not good buys and may lose money.

Time to make an offer?

Most lenders have staff dedicated to REO that you'll work with while buying REO property from them. To get their properties advertised on the local MLS, the lender will usually use a listing agent.

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 about the condition of the property and what their process is for receiving offers. Since banks most commonly sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for hidden damage and terminate the offer if you find it. If, as a buyer, you can provide documentation demonstrating your ability to pay, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This goes for any real estate offer.)

Once you've submitted your offer, you can expect the bank to respond with a counter offer. Then it will be up to you to decide whether to accept their counter, or make another counter offer. Your deal might be final in a single day, but that's usually not the case. Since offers and counter offers usually give the other party a day or longer to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer. Greater Florida Realty Inc. is used to working around the schedules of this type of seller and will do everything possible to ensure there are no unnecessary delays.

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