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Looking for REO property or a foreclosure in Missoula?
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Investing in a bank-owned property is not something to be taken lightly.
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What is an REO?
"REO" or Real Estate Owned are properties which have been foreclosed upon that the bank or mortgage company currently holds. 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 added during the foreclosure process. The buyer must also be able to pay with cash in hand. Finally, you'll accept the property totally as is. That possibly may consist of prevailing liens and even current tenants that may require removal.
A bank-owned property, conversely, is a much cleaner and attractive deal. The REO property was unable to find a buyer during foreclosure auction. Now the bank owns it. The bank will take care of 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.
Do be aware that REOs may be exempt from standard disclosure requirements.
For example, in California, banks do not have to give a Transfer Disclosure Statement,
a document that normally requires sellers to reveal any defects they are informed of.
By hiring Windermere Real Estate, you can rest assured knowing all parties are fulfilling Montana state disclosure requirements.
Are REO properties a bargain in Missoula?
It's sometimes thought that any foreclosure must be a good buy and an opportunity for easy money. This often isn't true. You have to be prudent about buying a REO if your intent is make a profit. Even though the bank is typically eager to sell it fast, they are also motivated to get as much as they can for it.
Look carefully at the listing and sales prices of similar properties 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 may not be money makers.
All set to make an offer?
Most mortgage companies have staff dedicated to REO that you'll work with while buying REO property from them. Typically the REO department will use a listing agent to get their REO properties listed on the local MLS.
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 what they know about the condition of the property and what their process is for getting offers. Since banks typically sell REO properties "as is", you may want to include an inspection contingency in your offer that gives you time to check for unknown damage and withdraw the offer if you find it.
As with making any offer on real estate, providing documentation proving your ability to pay may make your offer more attractive, such as a pre-approval letter from a lender.
After you've presented your offer, you can expect the bank to counter offer. At this point it will be your decision whether to accept their counter, or offer a counter to the counter offer.
Your deal might be settled in a single day, but that's usually not the case. 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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