Making an offer on REO property or a foreclosure in Lawrence, Douglas County, Franklin County, Shawnee County or Johnson County?


	Just as with any home purchase, your smartest move is to hire a professional real estate agent.

What's an REO?

"REO" is short for Real Estate Owned. These are properties which have been foreclosed upon and are presently possessed by the bank or mortgage company. This differs from real estate up for foreclosure auction. Century 21 Miller & Midyett- Team Abram has experience to share with foreclosures and bank owned properties in Lawrence, Kansas

Century 21 Miller & Midyett- Team Abram has experience to share with foreclosures and bank owned properties in Lawrence, Kansas

When buying 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 willing to pay with cash in hand. And on top of all that, you'll get the property 100% as is. That possibly could consist of prevailing liens and even current denizens that need to be kicked out.

A bank-owned property, on the other hand, is a more tidy and attractive proposition. The REO property did not find a buyer during foreclosure auction. The bank now owns it. The bank will handle the elimination of tax liens, evict occupants if needed and generally arrange for the issuance of a title insurance policy to the buyer at closing.

You should be aware that REOs may be exempt from standard disclosure requirements. For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement, a document that normally requires sellers to tell you about any defects of which they are informed. By hiring Century 21 Miller & Midyett- Team Abram, you can rest assured knowing all parties are fulfilling Kansas state disclosure requirements.

Are REO properties a bargain in Douglas County?

It is commonly assumed that any foreclosure must be a bargain and a possibility for guaranteed profit. This often isn't true. You have to be very careful about buying a repossession if your intent is make a profit. While it's true that the bank is typically eager to sell it quickly, they are also looking to minimize any losses.

Century 21 Miller & Midyett- Team Abram has experience to share with foreclosures and bank owned properties in Lawrence, Kansas

When contemplating what to pay for REO property, carefully analyze 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. But there are also many REOs that are not good buys and not likely to turn a profit.

Time to make an offer?

Most lenders have a department dedicated to REO that you'll work with while buying REO property from them. Commonly 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 discover as much as you can about what they know regarding the condition of the property and what their process is for taking 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 retract the offer if you find it. As with making any offer on real estate, you'll make your offer more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.

Once you've made your offer, it's customary for the bank to counter offer. At this point it will be up to you to decide whether to accept their counter, or make another counter offer. Your deal could be settled in one day, but that's usually not the case. Since offers and counter offers usually allow a day or more for the other party to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer.