Are you looking to get a great deal on a Foreclosure? Last year, approximately 13% of our area's residential sales were foreclosures or Bank Owned REO properties. In this buyers market, it is imperative that you align yourself with a realtor who knows the traditional inventory as well as the distressed properties. Most of the public realtor websites on the internet can not post all the REO properties. If they are listed in the MLS as private, these websites can not access them. The only way to get ALL the REO/Foreclosure listings in our area is to sign up for your Custom MLS Portal (Click Here).
A REO (Real Estate Owned) property is simply what most people refer to as a Foreclosure. The term REO comes from an accounting term OREO which stands for Other Real Estate Owned property. It is a "balance sheet" term that banks use to classify their non-earning assets for purposes of accounting. All you need to know is that a REO, OREO or Foreclosure are all pretty much the same thing, which is a property that has been taken back by the bank due to lack of payment. Take a look at our Foreclosure lists to the right. If you are Serious about getting the best deal possible, be sure to sign up for our "Property Notify" to get the most accurate and current MLS Inventory information possible.
When a person stops making payments on their loan and decides not to try and short sale their home, the bank usually will foreclose on the property. The bank must follow a set of legal procedures, specific timelines and notifications to foreclose on a home. When the final trustee sale occurs, the property is usually offered for sale at a public location, typically the county court house steps. Most people think this is the best place to purchase a foreclosure. It is NOT! First, you must have CASH! Not a check but CASH or Cashier's Check. Second, you probably have had no real chance to do any due diligence or investigations on the property. What condition is the structure, roof, plumbing, electrical, utilities....and so on? Third, it can be very difficult to ensure a clear title. Are there any encumbrances, liens, judgments, or easements on the property? Since there is no official escrow process, many of your rights and abilities to investigate the property are surrendered. As you might have guessed, this can lead to some huge issues down the road. This is why most foreclosure properties are not sold at auction, but are just taken back by the bank. By the bank taking the property back and then listing it on the MLS, it allows a great advantage to the buyer to purchase a Foreclosure with a contract and a Realtor representing them. Now, the buyer is able to enter into a legal purchase agreement with the bank that includes several buyer rights, time frames and contingencies. In most cases, you are allowed to perform all the due diligence and investigation you want. The property is also sold through a title/escrow company that insures clear title, eliminating the need to worry about past judgments that may cloud the title or ownership. The best part is, you do not pay any commissions for the realtor services. All the commissions are paid by the seller just as they are with any traditional sale. We represent you and your fiduciary interests and negotiate for you. Our job is to find you the best deal possible and negotiate all your wants and needs successfully. If you close escrow then, and only then, does the buyer's agent and the bank's listing agent get paid by the bank. There are absolutely no commission fees paid by you the buyer!
There really is no catch but more of a caveat! Foreclosures are very competitive. The bank's foreclosure departments are under staffed and overwhelmed! Often times the banks are pricing homes below market value to solicit quick offers and a speedy escrow time frame. Since most of these banks are pricing these properties to sell, it is very important that serious buyers are well educated with accurate information and inventory data. You as a buyer really need to have accurate and timely information, when competing with dozens of other buyers and investors. Unfortunately there is a learning curve and most buyers don't realize this until they have been beat out 3-4 times on great deals. We see this happen all the time. We really try and educate our clients on the most accurate and timely ways to research and view foreclosure data. Those that heed our warnings and take our advice are getting some amazing deals!
As Realtors, we cannot give legal or tax advice. The above opinions and statements are general rules of thumb and are subject to change. We, here at Merrill & Associates Real Estate, try and educate you with all the facts available and keep you informed to the best of our ability. Foreclosures and Short Sales can be very complicated. We ALWAYS recommend consulting an Attorney and Accountant to get legal and tax advice for your specific situation.