Looking for REO property or a foreclosure in Destin?

Investing in a bank-owned property is not something to be taken casually. Should you have any questions about real estate in Destin, Florida, call me or send me an e-mail.

What is an REO?

“REO” is an abbreviation for Real Estate Owned. These are homes which have gone through foreclosure and are presently possessed by the bank or mortgage company. This differs from a property up for foreclosure auction. foreclosure_home_02
If you buy a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees added during the foreclosure process. The buyer must also be ready to pay with cash in hand. Finally, you’ll receive the property completely as is. That possibly will comprise of prevailing liens and even current denizens that need to be put out.
A bank-owned property, on the other hand, is a more tidy and attractive deal. The REO property did not find a buyer during foreclosure auction. The lender now owns it. The lender will take care of the removal of tax liens, evict occupants if needed and generally organize for the issuance of a title insurance policy to the buyer at closing.
Do be aware that REOs may be exempt from standard disclosure requirements. In California, for example, banks are not required to give a Transfer Disclosure Statement, a document that normally requires sellers to make known any defects they are informed of. By hiring Coldwell Banker United, Realtors, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements. 

Is REO property in Destin a bargain?

It’s frequently thought that any REO must be a bargain and a possibility for guaranteed profit. This often isn’t true. You have to be very careful about buying a REO if your intent is make a profit. Even though the bank is typically anxious to sell it promptly, they are also motivated to get as much as they can for it. mortgage_risk_01
When contemplating the value of REO property, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale. There are bargains with potential to make money, and many people do very well buying and selling foreclosures. But there are also many REOs that are not good buys and may lose money. 

Prepared 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.
Before 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 typically sell REO properties “as is”, you may want to include an inspection contingency in your offer that gives you time to check for unseen damage and terminate 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.
After you’ve presented your offer, it’s customary for the bank to counter offer. Then it will be your decision whether to accept their counter, or offer a counter to the counter offer. Be aware, you’ll be contending with a process that usually involves multiple people at the bank, and they don’t work evenings or weekends. It’s not uncommon for the process of offers and counter offers to take days or even weeks.

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