Just as with any home purchase, your wisest move is to hire a professional real estate agent.
If you have questions about real estate in Ashburn, Virginia, call me or send me an e-mail.
What's an REO?
"REO" or Real Estate Owned are homes which have completed the foreclosure process that the bank or mortgage company currently owns. This is different than a property 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 accumulated during the foreclosure process. You must also be ready to pay with cash in hand. To top everything off, you'll get the property completely as is. That possibly may consist of prevailing liens and even current occupants that need to be evicted.
A bank-owned property, conversely, is a much cleaner and attractive deal. The REO property did not find a buyer during foreclosure auction. Now the lender owns it. The lender will take care of the removal 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 normally requires sellers to disclose any defects of which they are knowledgeable.
By hiring Exit Realty Talbot and Company, you can rest assured knowing all parties are fulfilling Virginia state disclosure requirements.
Are REO properties a bargain in Ashburn?
It is occasionally thought that any foreclosure must be a good deal and a chance for easy money. This often isn't true. You have to be very careful about buying a REO if your intent is make money. Even though the bank is usually eager to sell it soon, they are also motivated to minimize any losses.
When contemplating the value of REO property, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale.
There are bargains with potential to make money, and many people do very well flipping foreclosures. However there are also many REOs that are not good buys and may not be money makers.
All set to make an offer?
Most banks have staff dedicated to REO that you'll work with when buying REO property from them. Commonly 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 find out as much as you can about their knowledge concerning the condition of the property and what their process is for accepting 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 unseen damage and terminate 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, it's customary for the bank to counter offer. Then it will be up to you to decide whether to accept their counter, or submit another counter offer.
Be aware, you'll be contending with a process that usually involves several people at the bank, and they don't work evenings or weekends. It's not uncommon for the process of offers and counter offers to take days or even weeks.
When contemplating the value of REO property, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale.
There are bargains with potential to make money, and many people do very well flipping foreclosures. However there are also many REOs that are not good buys and may not be money makers.
