What is an REO?
REO's or Real Estate Owned are houses that have completed the foreclosure process which the bank or mortage company now holds. 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 accumulated during the foreclosure process. You must also be ready to pay with cash in hand. To top everything off, you'll get the property completely as is. That possibly will include current liens and even current tenants that need to be evicted.
A REO, conversely, is a much neater and attractive transaction. The REO property didn't find a buyer during foreclosure auction. Now the bank owns it. The bank will see to 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. Take notice that REOs may be exempt from normal disclosure requirements. For example, in California, banks do not have to give a Transfer Disclosure Statement, a document that normally requires sellers to make known any defects of which they are knowledgeable.
Is an REO in Ocala a bargain?
It is occasionally presume that any REO must be a good deal and an chance for easy money. This just isn't true. You have to be cautious about buying a REO if your intent is make money. While it's true that the bank is often anxious to sell it promptly, they are also strongly motivated to get as much as they can for it. When contemplating the value of a REO, 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 buying and selling foreclosures. Still there are also many REO's that are not good buys and may not be money makers.
Prepared to make an offer?
Most mortgage companies have a REO department that you'll work with while buying a REO property from them. Normally 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 discover 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 almost always sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for hidden damage and withdraw the offer if you find it.
As with making any offer on real estate, providing documentation of your ability to pay may make your offer more attractive, such as a pre-approval letter from a lender. After you've presented your offer, you can expect the bank to make a counter offer. At this point it will be up to you to decide whether to accept their counter, or make another counter offer. Understand, you'll be dealing with a process that usually involves a group of people at the bank, and they don't work evenings or weekends. It's quite common for the process of offers and counter offers to take days or even weeks.
Applying for the loan is one of the most troublesome parts of buying a house, but it doesn't have to be. I'm very familiar with a lot of mortgage lenders in Ocala, and they've helped me recognize some things that will make the process of applying for a loan pretty simple.
1 – Organize a list of questions about your loan program
If you do not perfectly realize the pros and cons of the different loan programs, be sure you bring a list of questions. I or one of my trusted lenders will be able to assist you in understanding the advantages and disadvantages of each program, because it can be hard to understand the distinctions between fixed and adjustable rate mortgages.
2 – Determine when to lock
When you lock in an interest rate, it means that the mortgage lender commits to the interest rates for the loan – commonly at the time the loan application is presented. By floating the rate, you can lock the rate anytime between the day you apply for your loan and at the time of closing. Those who opt to float think the interest rates will dip in the near future. Click here to see the outlook for the next 90 days of interest rates.
3 – Determine if you want to pay additional points to lower your rate
Generally you can choose to pay additional points to lower the interest rate of your loan. Each point is 1 percent of the loan and is payable in cash at the time of closing. To determine if purchasing points is the best option for you, click here to use our points calculator.
4 – Compile your paperwork
Acquiring a mortgage loan requires lots of paperwork, so you should spend some time getting all your documents together. Click here for a list of normal loan documentation.
Purchasing a home intimidates a lot of people. However, with some up-front planning, it isn't all that complicated. So they'll know exactly what they can expect, I like to furnish buyers with an outline of the whole deal. Here are my nine steps to buying a home. When you're ready to get started, just contact me here or e-mail me at . I'm happy to address any questions you have about this information.
Step 3 – Begin your searchFollowing our initial meeting, I'll begin finding available houses on the market that are a great fit for you. I'll get a sneak peek of most of the homes and exclude the duds, and then we'll set up appointments to tour the homes at a time that's convenient for you.
When we view houses, I'll identify good features, as well as negative ones. I'll even ask you what things you like and don't like. Frequently, buyers amend their must-have list as we view homes and some items become more substantial than others. If that's the case, I'll look through all the listings another time and narrow it down to the house you've been dreaming about.
Step 4 – Comprehend the marketYour agent's understanding of the Ocala market is a leading element in your home search. And I assure you I'm familiar with all the neighborhoods and schools, and I can communicate some areas are "hot" and call for immediate action and others that are "cold" and allow for thoughtful analysis.
When we view homes, I'll make sure to communicate if the list price has room for bargaining or if I believe the house is "priced to sell." Every REALTOR in Ocala will convince you they comprehend the home market, but keep an eye out, and be sure to ask plenty of questions. If it seems like they don't know everything, contact me at 352-237-4343 or e-mail me at , and I'll be happy to answer any questions you might have. My market knowledge will help you stay a step above the rest through the entire process.
Step 5 – Find the home you've been looking forI'm positive we'll find your dream house in the Ocala area. When we do, I'll meticulously develop your home purchase offer. The offer will be made to fit your needs and the home. We'll include some contingencies, such as acquiring financing, finishing the home inspection, and a clean title.
Step 6 – Negotiate the dealA lot of contracts don't close on the initial offer. It's widely common to receive a counter offer. Don't let it alarm you. We'll consider whether or not to consent to the counter offer, propose our own counter offer, or reject the seller's offer and go on.
Step 7 – Obtain financingOnce the contract is finalized, you'll begin working with your mortgage lender to close the loan. If you're pre-qualified, it won't be a long process at all. But you should to keep in close contact with your mortgage lender. And I'll look after all the property information your lender needs to close the loan.
Step 8 – Close the dealYour mortgage lender will supply you with a Loan Estimate (LE) outlining closing costs within three days of getting your application. You'll get a Loan Estimate (LE) of your closing costs from your mortgage lender within three days of accepting your application. This estimate is based on the loan amount. RESPA requirements mandate that it has to contain all closing costs and fall within a tight range of accuracy, and I'll study the estimate and let you know if it all looks okay.
Step 9 – Move inCongratulations! Now you can move into your new home. Enjoy it. And if you need anything, simply contact me at 352-237-4343 or e-mail me at .
8 Tips for Your Home Search