Purchasing REO property or a foreclosure in San Antonio?
Just as with any property purchase, your smartest move is to hire a professional real estate agent.
What is an REO?
"REO" means Real Estate Owned. These are houses which have been through foreclosure that the bank or mortgage company presently possesses. 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 amassed during the foreclosure process. The buyer must also be ready to pay with cash in hand. To top everything off, you'll accept the property entirely as is. That might consist of current liens and even current residents that need to be put out.
A bank-owned property, on the contrary, is a much cleaner and attractive option. The REO property did not 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 plan 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 disclose any defects of which they are knowledgeable. By hiring David Bowman, you can rest assured knowing all parties are fulfilling ZZ state disclosure requirements.
Are REO properties a bargain in San Antonio?
It's commonly believed that any REO must be a steal and an opportunity for easy money. This isn't always the case. You have to be cautious about buying a REO if your intent is to make a profit. While it's true that the bank is often eager to sell it soon, they are also motivated to minimize any losses.
Look carefully at the listing and sales prices of comparable 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 lose money.
All set to make an offer?
Most lenders have a department dedicated to REO that you'll work with when buying REO property from them. Typically 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 about the condition of the property and what their process is for taking offers. Since banks typically sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for unseen damage and withdraw 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 presented 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 make another counter offer. Your deal might be final in one 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.