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Making an offer on REO property or a foreclosure in Portland?
Investing in a bank-owned property is not something to be taken lightly. For more information, you can
through my site or
. I'm happy to answer questions you have regarding real estate foreclosures.
What's an REO?
"REO" or Real Estate Owned are properties which have completed the foreclosure process and are currently possessed by the bank or mortgage company. This is different than real estate up for foreclosure auction.
When buying a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees accrued during the foreclosure process. The buyer must also be able to pay with cash in hand. Finally, you'll get the property totally as is. That possibly will involve prevailing liens and even current tenants that need to be removed.
A bank-owned property, on the other hand, is a much neater and attractive option. The REO property was unable to find a buyer during foreclosure auction. The lender now owns it. The lender will see to the removal 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 ordinarily requires sellers to disclose any defects of which they are informed. By hiring Scott Trahan Realty Brokerage, you can rest assured knowing all parties are fulfilling Oregon state disclosure requirements.
Are REO properties a bargain in Portland?
It is commonly believed that any foreclosure must be a steal and a possibility for guaranteed profit. This simply isn't true. You have to be very careful about buying a REO if your intent is to make a profit. While it's true that the bank is often eager to offload it promptly, they are also looking to get as much as they can for it.
Look closely at the listing and sales prices of comparable homes in the neighborhood when considering the purchase of an REO. And factor in any repairs or upgrades 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. Still, there are also many REOs that are not good buys and not likely to turn a profit.
All set to make an offer?
Most lenders have a department 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 frequently contract with a listing agent.
Prior to making your offer, you'll want to contact either the listing agent or REO department at the bank and learn 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 typically 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 terminate the offer if you find it. If, as a buyer, you can provide documentation demonstrating 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 real estate offer.)
After you've submitted your offer, you can expect the bank to make a counter offer. Then it will be your decision whether to accept their counter, or offer a counter to the counter offer. Your transaction could be settled in one day, but that's usually not the case. 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.