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Interested in REO property or a foreclosure in Honolulu?
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Investing in a bank-owned property is not something to be taken lightly.
For more information, you can contact me through my site or e-mail me. I'm happy to address any questions you have regarding real estate foreclosures.
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What is an REO?
"REO" is an abbreviation for Real Estate Owned. These are properties which have been through foreclosure and are presently possessed by the bank or mortgage company. This is different than real estate 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 amassed during the foreclosure process. The buyer must also be prepared to pay with cash in hand. And on top of all that, you'll get the property 100% as is. That could comprise of prevailing liens and even current tenants that may require eviction.
A bank-owned property, on the other hand, is a more tidy and attractive option. The REO property was unable to find a buyer during foreclosure auction. Now the bank owns it. The bank will take care of the elimination of tax liens, evict occupants if needed and generally plan 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 instance, in California, banks are exempt from giving a Transfer Disclosure Statement,
a document that typically requires sellers to disclose any defects they are knowledgeable of.
By hiring Sandra Grenell, you can rest assured knowing all parties are fulfilling Hawaii state disclosure requirements.
Is REO property in Honolulu a bargain?
It's sometimes believed that any foreclosure must be a good buy and a possibility for guaranteed profit. This often isn't true. You have to be very careful about buying a REO if your intent is make a profit. Even though the bank is often eager to offload it fast, 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 may lose money.
Prepared to make an offer?
Most banks have staff dedicated to REO that you'll work with when buying REO property from them. To get their properties advertised on the local MLS, the lender will often use a listing agent.
Prior to 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 regarding the condition of the property and what their process is for accepting offers. Since banks most commonly 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 hidden damage and terminate the offer if you find it.
As with making any offer on real estate, providing documentation showing your ability to pay may make your offer more attractive, such as a pre-approval letter from a lender.
Once you've presented your offer, you can expect the bank to counter offer. From there it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer.
Understand, you'll be working with a process that most likely involves multiple people at the bank, and they don't work evenings or weekends. It's typical for there to be days or even weeks of going back and forth.
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