Purchasing a REO Property
June 27, 2011
With one quarter of the active listings on the MLS being bank-owned (REOs) buyers need to understand that a lender or bank has a chief objective of getting the property sold without subjecting the bank to lingering liability.
A bank's asset manager is usually someone who has probably never seen the property. For this reason, most banks will do an addendum to a purchase agreement that usually clearly states that they will not be responsible for any repairs. They are not required to do the usual disclosures - the buyer must use the inspection time to check out the condition of the property. Buyers of REO property generally must assume responsibility for any repairs that are necessary.
Buyers should also carefully review the preliminary title report. While it is true that foreclosure will eliminate subordinate liens, it does not eliminate property taxes or items that may have existed when the foreclosed owner bought the property. Be sure that the bank does provide and owner's title insurance policy.
If the bank will not pay for a one year home warranty policy, it is in a buyer's best interest to purchase one. If there is a home warranty policy that will cover pre existing conditions, that is the one to select.
Once the transaction has closed and the buyer receives the keys. the buyer should call a locksmith and have the locks changed. It is also important to reprogram the garage door opener.
Paying attention to time frames and being patient are important to successfully close a REO transaction.
With one quarter of the active listings on the MLS being bank-owned (REOs) buyers need to understand that a lender or bank has a chief objective of getting the property sold without subjecting the bank to lingering liability.
A bank's asset manager is usually someone who has probably never seen the property. For this reason, most banks will do an addendum to a purchase agreement that usually clearly states that they will not be responsible for any repairs. They are not required to do the usual disclosures - the buyer must use the inspection time to check out the condition of the property. Buyers of REO property generally must assume responsibility for any repairs that are necessary.
Buyers should also carefully review the preliminary title report. While it is true that foreclosure will eliminate subordinate liens, it does not eliminate property taxes or items that may have existed when the foreclosed owner bought the property. Be sure that the bank does provide and owner's title insurance policy.
If the bank will not pay for a one year home warranty policy, it is in a buyer's best interest to purchase one. If there is a home warranty policy that will cover pre existing conditions, that is the one to select.
Once the transaction has closed and the buyer receives the keys. the buyer should call a locksmith and have the locks changed. It is also important to reprogram the garage door opener.
Paying attention to time frames and being patient are important to successfully close a REO transaction.
posted by shirley harry at 8:25 AM
3 Comments:
great post I subscribed to your blog!
REO Properties for Sale
Great information thanks for getting this out there for people like me to read.
REO Properties for Sale
great information you write it very clean. I am very lucky to get this tips from you.
REO Properties for Sale
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