Buying a Foreclosure
The foreclosure process begins when a homeowner defaults on loan payments (mortgage payments) and the lender files a public default notice. In turn, this allows a lender to recover the amount owed on a defaulted loan by selling or trading ownership (repossession) of the property securing the loan.
What is an REO?
REO is the same as “Real Estate Owned” which are properties that have gone through foreclosures without a successful sale and are now reverted back to the bank, lender or mortgage company. This is not the same as a property up for foreclosure auction.
In today’s Real Estate market, buyers as well as investors are looking to buy these foreclosure listings for one main reason and that is low, low prices. Property prices have declined so much that the best thing to do now is invest and find the deal you are looking for. We can help you find this great deal and at no cost to you!!!
Just keep in mind that buying a house from a bank, mortgage company or other lending institutions such as REO’s and/or foreclosures is not the same thing, or process as buying a property from a private seller.
Be ready to purchase a foreclosure…
As previously mentioned, buying a property from a bank or mortgage company is not the same as if you were to buy this same property from a private seller. You have to be ready!
We will work with you to help you understand the process in buying this type of property. We will help you in determining you financial capabilities as well as guide you in the important process of getting pre-approved before you go out there to find that good deal. We work with various lenders and mortgage brokers that will gladly assist you with the best rates.
Any REO or foreclosure transaction is time sensitive and in most cases, the clock starts ticking the minute the company representing the foreclosure of REO, advises that your offer has been accepted. They will usually contact the Buyer or the Buyer’s agent that their offer has been accepted. After acceptance of the contract, there is very little time in which the buyer shall put their deposit in escrow at the lenders title company who represents that foreclosure property. The escrow deposit after this point could become non-refundable if the buyer does not comply with the contract conditions and terms. That’s where I come in to ensure you follow your contract through until closing in order to avoid the risk of the buyer losing their deposit.
Some of the requirements involved in presenting an offer for this type of property include but are not limited to…
A pre-approval letter based on review of your credit and income tax returns.
A letter of commitment from a direct lender.
If cash, then verification of funds (bank statement showing you have the funds to purchses the property at hand)
A 5%-to 10% earnest money deposit using certified funds (either a copy of the check or in some cases the check has to be presented with the offer) If a check copy is sufficient at the time, then if your offer gets accepted, the certified check must be delivered to the bank’s title company within 24 to 48 hours.
Complete contract (usually an As-Is contract) for presenting your offer as well as all necessary addendums required by the bank. You should always attach a Lead-based paint disclosure regardless of the year the property was built.
Above all, you must always be prepared when making an offer for an REO or foreclosure property. These properties are usually priced below market value prices and on average, a 3%-6% discount in their list price may be given on properties which have already been substantially reduced. These great deals sell quickly and usually encounter multiple offer situations which means the bank may receive many, many offers as much as 15-20 offers on any one property. In other words, you have to act FAST!
Foreclosed homes are a great investment opportunity, and there are many of them on the market right now. Click on the button below to find foreclosure homes in your area at NO cost to you….
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