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Purchasing REO property or a foreclosure in Slidell?
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Just as with any property purchase, your wisest move is to hire a professional real estate agent.
If you have questions about real estate in Slidell, Louisiana, call me or send me an e-mail.
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What is an REO?
"REO" or Real Estate Owned are houses which have been foreclosed upon and are currently held 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 accrued during the foreclosure process. The buyer must also be prepared to pay with cash in hand. To top everything off, you'll receive the property 100% as is. That might involve prevailing liens and even current residents that may require expulsion.
A bank-owned property, by contrast, is a more tidy and attractive option. The REO property didn't find a buyer during foreclosure auction. The lender now owns it. The bank 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.
Note that REOs may be exempt from normal disclosure requirements.
For instance, in California, banks are not required to give a Transfer Disclosure Statement,
a document that normally requires sellers to disclose any defects of which they are aware.
By hiring Real Property Realtors, you can rest assured knowing all parties are fulfilling Louisiana state disclosure requirements.
Am I assured a bargain when purchasing an REO property in Slidell?
It's occasionally thought that any REO must be a bargain and an opportunity for easy money. This often isn't true. You have to be cautious about buying a REO if your intent is to make money off of it. While it's true that the bank is often anxious to sell it quickly, they are also motivated to minimize any losses.
When contemplating what to pay for a foreclosure, carefully analyze 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 flipping foreclosures. But there are also many REOs that are not good buys and may not be money makers.
Ready to make an offer?
Most mortgage companies have staff dedicated to REO that you'll work with while 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 concerning the condition of the property and what their process is for receiving offers. Since banks usually 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 retract 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 is generally true for any type of real estate offer.)
Once you've made your offer, you can expect the bank to make a counter offer. At this point it will be your decision whether to accept their counter, or submit another counter offer.
Be aware, you'll be contending with a process that most likely 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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