Looking at a REO, any suggestions?

[brewer12345]

Assuming the realtor gets back to me, I plan on looking at a REO property next weekend. This property might have a number of potential uses (long term rental, vacation rental, vacation home, fix and flip, etc.), depending on what it looks like in person and what price I might be able to wangle. I've bought houses before, but never from a bank. What should I expect to be different? Gotchas to watch out for in the event I bid?

 

[omni550]

Assuming the realtor gets back to me, I plan on looking at a REO property next weekend. This property might have a number of potential uses (long term rental, vacation rental, vacation home, fix and flip, etc.), depending on what it looks like in person and what price I might be able to wangle. I've bought houses before, but never from a bank. What should I expect to be different? Gotchas to watch out for in the event I bid?

For the best chance at getting the house, make your offer CASH and as contingency-free as possible. If you can, just insist on an inspection (which can be your way "out" of the deal) and that's it.

From the bank, expect a lot of extra paperwork to be filled out including supplying proof of funds, etc.

Also, do not expect the bank to act quickly. Many houses go unsold because the banks are dragging their feet.

omni

 

[ESRBob]

Let the bottom fishing begin?
Good luck with it, Brewer. A friend of mine is a professional putting together and buying dozens of these properties in foreclosure in big pools. He's really happy right now (and asking me to make him a nice bronze sculpture to grace his new pool... ;-)

 

[brewer12345]

Hey I am happy to help clear the market, provided the price is right.

 

[Nords]

Let the bottom fishing begin?
Good luck with it, Brewer. A friend of mine is a professional putting together and buying dozens of these properties in foreclosure in big pools. He's really happy right now (and asking me to make him a nice bronze sculpture to grace his new pool... ;-)

Hey I am happy to help clear the market, provided the price is right.

I'd speculate that the closing will take twice as long as you expected and the entire transaction may cost an extra 50% above your estimate.

Although this seems hard to believe, I've heard that some REOs have title difficulties. It appears to be involved with the delay between the previous owner's abandonment and the recording of the bank's ownership.

Bank REOs don't always give you a chance to inspect the property before it goes on the sale block. Even if you have the nation's best home inspector in there, when a flipper tears into a wall there may be more expensive surprises than they really cared to deal with. Then there's the usual delays with permits, mandatory upgrades to current codes, sale disclosures, and selling (or renting) into a challenging market.

I think it all boils down to "Are you busy enough yet?" and "How much do you love doing this?" I wouldn't see it as a straightforward low-effort way to enrichment.

 

[brewer12345]

Yeah, which is why the price has to be right. And I am not panting and drooling to buy property. If the deal works, great. If not, there are lots of attractive opportunities in the capital markets.

 

[Martha]

My experience is that most banks offer title insurance on REO properties, which gets past the title difficulties. Most of the time the title is cleaned up in the course of foreclosure anyway.