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Looking for REO property or a foreclosure in Brooklyn?
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Investing in a bank-owned property is not something to be taken casually. |
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What is an REO?"REO" is Real Estate Owned. These are houses which have been foreclosed upon and are presently held by the bank or mortgage company. This is unlike 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 added during the foreclosure process. The buyer must also be prepared to pay with cash in hand. Finally, you'll accept the property totally as is. That possibly could consist of standing liens and even current tenants that may require removal.
A bank-owned property, by contrast, is a much neater and attractive proposition. The REO property didn't 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 prepare for the issuance of a title insurance policy to the buyer at closing.
Note that REOs may be exempt from standard disclosure requirements. For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement, a document that ordinarily requires sellers to make known any defects of which they are aware. By hiring ABC Real Estate Services, Inc., you can rest assured knowing all parties are fulfilling New York state disclosure requirements.
Are REO properties a bargain in Kings County?It is commonly presumed that any foreclosure must be a steal and an opportunity for guaranteed profit. This isn't always true. You have to be very careful about buying a REO if your intent is to make money off of it. While it's true that the bank is typically anxious to offload it fast, they are also motivated to get as much as they can for it.
 Look carefully at the listing and sales prices of comparable homes in the neighborhood when considering the purchase of an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in. The bargains with money making potential exist, 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.
Time to make an offer?Most mortgage companies have staff dedicated to REO that you'll work with when buying REO property from them. Normally 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 about the condition of the property and what their process is for receiving 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 unknown 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.
Once you've presented your offer, you can expect the bank to respond with a counter offer. From there it will be your choice whether to accept their counter, or submit another counter offer. Your deal could be final in one day, but that's rare. Since offers and counter offers usually give the other party a day or longer to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer.
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Simple Solutions to Real Estate Problems
Appraisers, Brokers & Counselors of Real Estate
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