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Purchasing REO property or a foreclosure in AUSTIN?
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Purchasing a bank-owned property is not something to be taken lightly. |
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What is an REO?"REO" or Real Estate Owned are homes which have completed the foreclosure process and are currently possessed by the bank or mortgage company. This differs from real estate 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 amassed during the foreclosure process. You must also be willing to pay with cash in hand. Finally, you'll receive the property totally as is. That possibly may consist of existing liens and even current residents that need to be expelled.
A bank-owned property, conversely, is a much cleaner and attractive option. The REO property didn't find a buyer during foreclosure auction. The lender now 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 normal 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 HUD512, you can rest assured knowing all parties are fulfilling Texas state disclosure requirements.
Is REO property in AUSTIN a bargain?It's occasionally believed that any foreclosure must be a bargain and a possibility for guaranteed profit. This isn't necessarily true. You have to be prudent about buying a REO if your intent is profit from the sale. While it's true that the bank is usually eager to offload it soon, they are also motivated to get as much as they can for it.
 Look carefully at the listing and sales prices of similar 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. It is possible to find REOs with money-making potential, 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. To get their properties advertised on the local MLS, the lender will usually contract with a listing agent.
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 concerning the condition of the property and what their process is for receiving 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 hidden damage and cancel the offer if you find it. If, as a buyer, you can provide documentation demonstrating your ability to pay, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This goes for any real estate offer.)
After you've presented your offer, you can expect the bank to counter offer. Then it will be your decision whether to accept their counter, or make another counter offer. Be aware, you'll be contending with a process that usually involves several people at the bank, and they don't work evenings or weekends. It's typical for the process of offers and counter offers to take days or even weeks. HUD512 is accustomed to these situations and will work to ensure there are no undue delays.
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