Interested in REO property or a foreclosure in Cincinnati?
Just as with any property purchase, your smartest move is to hire a professional real estate agent.
What's an REO?
"REO" or Real Estate Owned are homes which have completed the foreclosure process and are presently held by the bank or mortgage company. This is not the same as 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 added during the foreclosure process. You must also be ready to pay with cash in hand. To top everything off, you'll receive the property entirely as is. That possibly may comprise of prevailing liens and even current tenants that need to be thrown out.
A bank-owned property, on the other hand, is a much cleaner and attractive deal. The REO property didn't find a buyer during foreclosure auction. The bank now owns it. The lender will handle 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.
Note that REOs may be exempt from typical 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 aware. By hiring J.A. Trautmann Realtors, you can rest assured knowing all parties are fulfilling Ohio state disclosure requirements.
Is REO property in Cincinnati a bargain?
It is frequently assumed that any REO must be a steal and a chance for easy money. This often isn't true. You have to be prudent about buying a REO if your intent is to make money off of it. Even though the bank is usually anxious to sell it promptly, they are also looking to minimize any losses.
When contemplating the value of REO property, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale. The bargains with money making potential exist, and many people do very well flipping foreclosures. Still, there are also many REOs that are not good buys and not likely to turn a profit.
All set to make an offer?
Most banks 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 typically hire a listing agent.
Before 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 about the condition of the property and what their process is for receiving offers. Since banks almost always 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 is generally true for any real estate offer.)
Once you've made your offer, it's customary for the bank to counter offer. From there it will be your decision whether to accept their counter, or submit another counter offer. Realize, you'll be contending with a process that generally involves multiple people at the bank, and they don't work evenings or weekends. It's not uncommon for the process of offers and counter offers to take days or even weeks.