Buying Park City Foreclosures and REOs
Making an offer on a bank-owned property is not something to be taken lightly. Should you have questions about real estate in Park City, Utah, call me or send me an email.
What is an REO?
"REO" is an abbreviation for Real Estate Owned. These are properties which have completed the foreclosure process and are currently possessed by the bank or mortgage company. This is unlike 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. The buyer must also be ready to pay with cash in hand. And on top of all that, you'll accept the property entirely as is. That possibly will comprise of standing liens and even current tenants that may require eviction.
A bank-owned property, conversely, is a much cleaner and attractive proposition. The REO property was unable to find a buyer during foreclosure auction. Now the lender owns it. The bank will see to 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.
Note that REOs may be exempt from standard disclosure requirements. For example, in North Carolina, it is optional for foreclosures to have a Property Disclosure Statement, a document that normally requires sellers to reveal any defects they are aware of. By hiring Sean Railton, you can rest assured knowing all parties are fulfilling Utah state disclosure requirements.
Am I guaranteed a good deal when investing in a bank owned property in Park City?
It's frequently presumed that any foreclosure must be a steal and an opportunity for guaranteed profit. This often isn't true. You have to be cautious about buying a repossession if your intent is to make money off of it. Even though the bank is typically anxious to offload it quickly, they are also motivated to get as much as they can for it.
When contemplating what to pay for a foreclosure, 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 buying and selling foreclosures. Still there are also many REOs that are not good buys and may lose money.
Ready to make an offer?
Most mortgage companies have staff dedicated to REO that you'll work with in 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 learn as much as you can about their knowledge about the condition of the property and what their process is for accepting offers. Since banks most commonly 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, your offer may be 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 choice whether to accept their counter, or make another counter offer. Be aware, you'll be dealing with a process that usually involves several people at the bank, and they don't work evenings or weekends. It's typical for there to be days or even weeks of going back and forth.