Buying a foreclosure or REO property in Las Vegas
What’s an REO?
REO is short for Real Estate Owned. These are homes that have been foreclosed upon which the bank or mortage company currently owns. This is not the same as a property 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 added during the foreclosure process. You must also be prepared to pay with cash in hand. And on top of all that, you’ll get the property entirely as is. That might comprise current liens and even current denizens that may require eviction.
A REO, on the other hand, is a more tidy and attractive proposition. The REO property didn’t find a buyer during foreclosure auction. Now the lender owns it. The lender will deal with 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 standard disclosure requirements. In California, for example, banks do not have to give a Transfer Disclosure Statement, a document that ordinarily requires sellers to tell you about any defects they are aware of.
Is an REO in Las Vegas a bargain?
It’s occasionally presume that any REO must be a good deal and an possibility for easy money. This isn’t necessarily true. You have to be very careful about buying a REO if your intent is to make money off of it. While it’s true that the bank is often anxious to sell it quickly, they are also strongly interested to get as much as they can for it. When pondering 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. It is possible to find REOs with money-making potential, 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 a REO department that you’ll work with when buying a REO property from them. Usually the REO department will use a listing agent to get their REO properties listed on the local MLS. 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 what they know regarding the condition of the property and what their process is for getting offers. Since banks almost always sell REO properties “as is,” you may want to include an inspection contingency in your offer that gives you time to check for unseen damage and cancel 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 counter offer. Then it will be your decision whether to accept their counter, or submit another counter offer. Realize, you’ll be contending with a process that probably involves several 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.