What is a Foreclosure?
The foreclosure process begins when a homeowner defaults on loan payments (usually mortgage payments) and the lender files a public default notice.
Foreclosure is a process that allows a lender to recover the amount owed on a defaulted loan by selling or trading ownership (repossession) of the property securing the loan.
What is an REO?
REO stands for “Real Estate Owned”. These are properties that have gone through foreclosure without a successful sale and are now reverts back to the bank, lender or mortgage company. This is not the same as a property up for foreclosure auction.
In today’s market most buyers are looking to purchase foreclosure properties for one important reason: Low Prices! We can help you find a good deal! However buying a house from a bank, mortgage company or other lending institutions such as REO’s, Foreclosures or Bank or Corporate Owned properties does not work like buying a house from a private seller.
There are 2 parts to the process:
1. Be Ready to Purchase a Foreclosure.
As we mentioned, buying a bank or corporate owned property is not the same as buying a home from a private seller. YOU MUST BE READY!
We will help you understand the process and prepare you to purchase a bank or corporate owned property. We will also assist you in determining your financial capabilities and guide you in the very important process to get you pre-approved by suggesting the best bank alternatives.
Everything about an REO sales transaction is time sensitive. In most cases, time starts ticking the second the company representing the REO Seller gives notice or contacts the Buyer or Buyer’s agent that their offer has been accepted. After deadlines expire, the contract may convert to a cash transaction and the earnest money (escrow deposit) may be non-refundable. Yet another reason you will need an experienced professional helping you with the transaction.
Following are some of the requirements to presenting an offer for a REO:
· A letter of commitment from the direct lender.
· Pre-approval letter from the lender based upon review of credit and income before submitting the offer. Some may require credit score.
· REO properties are sold in As-Is conditions (term set forth by REO sellers).
· Verification of funds letter on all offers, particularly cash offers.
· A 5%-10% Earnest Money Deposit using certified funds. In some cases, certified check must be delivered together with the offer or no later than 24 hours after verbal acceptance of the offer.
· Lead based paint disclosure regardless of year property was built.
· REO seller will not accept an offer with a contingency to rent or sell a property.
You must be prepared to make an offer for an REO property. Take into consideration that the best deals sell quickly and on average a 3-5% discount from the asking price may be given on properties which are already substantially well below their market value. In other words, there is an abundance of buyers bidding daily on these properties and you should have all of the documents and requirements necessary to make an offer. This way, when we find you a good deal, no time has been wasted, and you will be “ready”.
2. Finding a foreclosure property that meets your needs at great price.
As your area specialist for 15 years, we follow every foreclosure and can add perspective and knowledgeable information for those properties that an outsider simply cannot match.
In our website we only have a limited number of bank-owned/foreclosure properties. However, there are many more bank-owned properties available that are placed on the market everyday. We have the tools to find those properties as soon as they are listed. WE CAN HELP YOU FIND A FORECLOSURE HOME IN THE AREA THAT YOU WANT!
We take pride in our services and in our commitment to find the best deal in the market. We also need your commitment. We require a non-refundable deposit of $500.00 and a Buyer-Brokerage Agreement where we outline our services, our obligations, and your commitment to work with our company. We will give you $1000 at the time of closing (DOUBLE THE AMOUNT OF THE DEPOSIT).
Not only will we help you find the best deal in the market; we will also help you get ready to purchase a foreclosed property.