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Purchasing REO property or a foreclosure in Indianapolis?
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Smart consumers will turn to a seasoned pro when considering a foreclosed property.
Should you have questions regarding real estate in Indianapolis, Indiana, call me or send me an e-mail.
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What is an REO?
"REO" stands for Real Estate Owned. These are properties which have been through foreclosure and are currently possessed by the bank or mortgage company. This differs from a property up for foreclosure auction.
If you buy a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees accrued 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 entirely as is. That possibly could consist of prevailing liens and even current occupants that need to be kicked out.
A bank-owned property, by contrast, is a much neater and attractive option. The REO property did not find a buyer during foreclosure auction. Now the bank owns it. The lender will deal with the elimination of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.
You should be aware that REOs may be exempt from normal disclosure requirements.
For example, in California, banks are exempt from giving a Transfer Disclosure Statement,
a document that typically requires sellers to make known any defects of which they are informed.
By hiring A.M. Sandler & Associates, you can rest assured knowing all parties are fulfilling Indiana state disclosure requirements.
Am I guaranteed a bargain when buying a bank owned property in Indianapolis?
It is sometimes thought that any REO must be a steal and a chance for guaranteed profit. This simply isn't true. You have to be prudent about buying a repossession if your intent is make a profit. Even though the bank is often eager to offload it fast, they are also looking to get as much as they can for it.
Look closely at the listing and sales prices of comparable homes 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 buying foreclosures. Still there are also many REOs that are not good buys and may not be money makers.
All set to make an offer?
Most mortgage companies have a department dedicated to REO that you'll work with in buying REO property from them. Typically 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 discover as much as you can about what they know concerning the condition of the property and what their process is for getting offers. Since banks usually 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 unseen damage and retract the offer if you find it.
If, as a buyer, you can provide documentation showing your ability to secure financing, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This is generally true for any type of real estate offer.)
After you've made your offer, it's customary for the bank to make a counter offer. At this point it will be your choice whether to accept their counter, or make another counter offer.
Your transaction might be final in one day, but that's rare. Since offers and counter offers usually give the other party a day or longer to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer.
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