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Looking for REO property or a foreclosure in Hot Springs?
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Making an offer on a bank-owned property is not something to be taken casually.
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What's an REO?
"REO" is an abbreviation for Real Estate Owned. These are homes which have completed the foreclosure process that the bank or mortgage company now owns. 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. You must also be prepared to pay with cash in hand. And on top of all that, you'll accept the property 100% as is. That possibly may include prevailing liens and even current tenants that may require eviction.
A bank-owned property, conversely, is a more tidy and attractive deal. The REO property was unable to find a buyer during foreclosure auction. Now the bank owns it. The lender will see to the elimination of tax liens, evict occupants if needed and generally organize for the issuance of a title insurance policy to the buyer at closing.
Note that REOs may be exempt from typical disclosure requirements.
For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement,
a document that typically requires sellers to disclose any defects they are aware of.
By hiring ERA Rushing McAdams Polychron REALTORS, you can rest assured knowing all parties are fulfilling Arkansas state disclosure requirements.
Is REO property in Hot Springs a bargain?
It's commonly thought that any foreclosure must be a steal and a possibility for guaranteed profit. This simply isn't true. You have to be prudent about buying a REO if your intent is to make money off of it. While it's true that the bank is often eager to sell it soon, they are also looking to minimize any losses.
Look carefully at the listing and sales prices of similar 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.
The bargains with money making potential exist, and many people do very well flipping foreclosures. However there are also many REOs that are not good buys and not likely to turn a profit.
Prepared to make an offer?
Most mortgage companies have staff dedicated to REO that you'll work with while buying REO property from them. Usually 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 what they know concerning the condition of the property and what their process is for receiving offers. Since banks almost always sell REO properties "as is", you'll want to be sure and 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 counter offer. At this point it will be your decision whether to accept their counter, or make another counter offer.
Understand, you'll be contending with a process that generally involves several people at the bank, and they don't work evenings or weekends. It's not unusual for the process of offers and counter offers to take days or even weeks.
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