Looking for REO property or a foreclosure in Palm Beach?
Just as with any property purchase, your wisest move is to hire a professional real estate agent.
What's an REO?
"REO" means Real Estate Owned. These are homes which have been foreclosed upon and are currently held by the bank or mortgage company. This differs from 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. You must also be willing to pay with cash in hand. To top everything off, you'll accept the property completely as is. That may consist of prevailing liens and even current denizens that need to be expelled.
A bank-owned property, by contrast, is a more tidy and attractive deal. The REO property didn't find a buyer during foreclosure auction. Now the bank owns it. The bank will deal with the elimination of tax liens, evict occupants if needed and generally prepare 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 California, banks do not have to give a Transfer Disclosure Statement, a document that typically requires sellers to disclose any defects of which they are knowledgeable. By hiring me, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Am I assured a bargain when buying a bank owned property in Palm Beach County?
It is occasionally believed that any foreclosure must be a good deal and an opportunity for guaranteed profit. This isn't necessarily the case. You have to be prudent about buying a REO if your intent is to make a profit. While it's true that the bank is often eager to sell it fast, they are also looking to get as much as they can for it.
Look carefully at the listing and sales prices of competing 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. There are bargains with potential to make money, and many people do very well buying foreclosures. Still, there are also many REOs that are not good buys and not likely to turn a profit.
Time to make an offer?
Most banks have a department dedicated to REO that you'll work with in buying REO property from them. To get their properties advertised on the local MLS, the lender will often 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 their knowledge about the condition of the property and what their process is for accepting offers. Since banks typically sell REO properties "as is", it may be in your best interest 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. If, as a buyer, you can provide documentation proving 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 holds for any type of real estate offer.)
After you've made your offer, you can expect the bank to respond with 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 final in one 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. I am used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.