Interested in REO property or a foreclosure in Central Virginia?
| Making an offer on a bank-owned property is not something to be taken casually. If you have any questions about real estate in Central Virginia, call me or send me an e-mail. |
What’s an REO?
“REO” stands for Real Estate Owned. These are homes which have been foreclosed upon that the bank or mortgage company now holds. This is different than real estate 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 accumulated during the foreclosure process. The buyer must also be prepared to pay with cash in hand. Finally, you’ll get the property totally as is. That possibly could comprise of existing liens and even current denizens that need to be thrown out. A bank-owned property, conversely, is a much neater and attractive proposition. The REO property didn’t find a buyer during foreclosure auction. Now the bank owns it. The lender will take care of the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing. |
Note that REOs may be exempt from normal disclosure requirements. For example, in Nevada, it is optional for foreclosures to have a Property Disclosure Statement, a document that normally requires sellers to tell you about any defects of which they are knowledgeable. By hiring Home for Life Realty, LLC, you can rest assured knowing all parties are fulfilling Virginia state disclosure requirements.
Is REO property in Central Virginia a bargain?
It’s occasionally thought that any foreclosure must be a good deal 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 soon, they are also motivated to get as much as they can for it
 | Look closely at the listing and sales prices of similar properties in the neighborhood when making an offer on an REO. And factor in any repairs or remodeling 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 and selling foreclosures. However there are also many REOs that are not good buys and may not be money makers. |
Time to make an offer?
Most banks 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 discover as much as you can about their knowledge concerning the condition of the property and what their process is for accepting 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 hidden damage and cancel the offer if you find it. As with making any offer on real estate, you’ll make your offer more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
After you’ve submitted your offer, you can expect the bank to respond with a counter offer. From there it will be your decision whether to accept their counter, or submit another counter offer. Your transaction might be settled 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.