Interested in REO property or a foreclosure in Colorado Springs?
Just as with any home purchase, your wisest move is to hire a professional real estate agent. Should you have questions about real estate in Colorado Springs, Colorado, call me or send me an e-mail.
What is an REO?
"REO" or Real Estate Owned are properties which have completed the foreclosure process that the bank or mortgage company now owns. This differs from 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 amassed during the foreclosure process. You must also be willing to pay with cash in hand. Finally, you'll accept the property totally as is. That possibly will comprise of prevailing liens and even current occupants that may require eviction.
A bank-owned property, conversely, is a much neater and attractive proposition. The REO property didn't find a buyer during foreclosure auction. Now the lender owns it. The bank will take care of 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.
Take notice that REOs may be exempt from normal disclosure requirements. For example, in North Carolina, it is optional for foreclosures to have a Property Disclosure Statement, a document that normally requires sellers to tell you about any defects of which they are informed. By hiring The Hauber Realty Group, you can rest assured knowing all parties are fulfilling Colorado state disclosure requirements.
Are REO properties a bargain in El Paso County?
It is sometimes presumed that any foreclosure must be a steal and a chance for easy money. This isn't necessarily true. You have to be very careful about buying a REO if your intent is profit from the sale. While it's true that the bank is typically anxious to sell it soon, they are also looking to get as much as they can for it.
Look closely at the listing and sales prices of competing properties in the neighborhood when making an offer on an REO. And factor in any repairs or upgrades 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. But there are also many REOs that are not good buys and not likely to turn a profit.
Prepared to make an offer?
Most lenders have staff dedicated to REO that you'll work with when buying REO property from them. Typically 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 learn as much as you can about what they know about the condition of the property and what their process is for taking offers. Since banks usually 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 unknown damage and terminate 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 is generally true for any type of real estate offer.)
Once you've presented your offer, you can expect the bank to make a counter offer. From there it will be up to you to decide whether to accept their counter, or make another counter offer. Understand, you'll be contending with a process that probably involves a group of people at the bank, and they don't work evenings or weekends. It's quite common for there to be days or even weeks of going back and forth. The Hauber Realty Group is accustomed to these situations and will work to ensure there are no undue delays.
Look closely at the listing and sales prices of competing properties in the neighborhood when making an offer on an REO. And factor in any repairs or upgrades 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. But there are also many REOs that are not good buys and not likely to turn a profit.
