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REO Foreclosures in Frisco Texas
Frequently Asked Questions
Q: What is a REO?
A: A REO “Real Estate Owned” property is a house that
has already gone through the legal process of foreclosure and the bank id now
the legal owner.
Q: How do I buy a REO?
A: Buying a REO is much like purchasing any other
house. You can pick from the available foreclosure listings and through your
real estate agent, make an offer to the bank. When a deal is agreed upon by both
parties, inspections are done, financing is arranged, and the deed is transferred to
the buyer at closing.
Q: How much can I save on a Bank Foreclosure?
A: The savings vary from house to house. There are
many factors that determine the sales price. One variable would be the DOM “days on market”. The
longer the property stays on the market, the more anxious the bank gets to sell
it. Another consideration is the amount of money owed on the house when it was
foreclosed on. It’s usually all about the bottom line. A third influence that
affects the selling prices is condition, this usually coincides with how many days
the house has been on the market. The listing agent will notify the bank of what
condition the house is in when it goes into the system. If the bank ignores this
information, the initial list price will be too high and the house will not
sell. Subsequently, after a month or two, and a re-evaluation by the seller, the
price will drop. I look for properties that will sell for at least ten percent
below market value, so a $300,000 house should sell below $270,000.
Q: Do all foreclosures have value?
A: No, a comparative market analysis
should be done to
compare the foreclosure with other listed properties that have sold in the area.
This will determine if there is any real value. Some
foreclosures are listed at, and sometimes above, the current market value.
Q: Can I have an inspection done on the house?
A: Yes, since the bank who owners the property has no
idea what actual condition the house is in, and they are not required by law to
provide a sellers disclosure to the buyer, an inspection period of seven to ten
days is usually allowed. However, most banks do not give an unrestricted
right to terminate the contract, which means, if during the inspection period a
real defect is found, the bank may have the right to fix the problem and continue on
with the sale.
Q: How do I finance an REO?
A: The process is
similar to buying any other house, but there are a couple of things to keep in
mind. Prequalification letters are required to submit an offer on any bank owned foreclosure. If you do not
have this letter, or proof of funds if paying cash, the offer will rejected
without consideration. Most banks selling REO’s will not allow repairs to be
made to the property before closing, this could be a catch 22 situation if the
the property needs some type of repair in order for a new loan to be issued. If
there are structural issues or the house is in need of extensive repair, your
finance company will probably want the house fixed before closing.
Q: Do all foreclosed propertied need repair?
A: No, some
houses are in move in condition with no real need of repairs. Of course,
location and age of the home plays a big role in the condition of any
foreclosure; newer homes are generally in good condition, maybe needing some
interior paint and possibly a carpet cleaning or replacement. Generally, newer,
higher priced houses are in the best shape, the older houses that fall victim to
foreclosure tend to need more repair simply from attrition and the lack of
constant upkeep by the previous owners.
Q: Will the seller pay for my closing costs?
A: Yes, when making an offer, seller contributions
can be added to the contract lowering the amount you would have to bring to
closing. Not all banks will offer this but many will.
Q: How long does it take to buy a foreclosure?
A: It may take about a
week, give or take, to negotiate a deal with the bank, but from the date on the executed contract to closing,
you are looking at about 30 to 45 days. What the selling bank really wants is a
quick closing. The sooner the closing, the sooner they stop loosing money; but
keep in mind, a bank addendum generally contain a per diem interest section
allowing them to hit you with a fee if the closing has to be extended, so asking
for a little extra time up front to obtain financing may avoid additional costs
should something happen to stall the closing. For every day a closing is delayed
due to the buyer, the seller can assesses a daily fee of approximately that will
range from $100 up to $300.
Q: Where do I start?
A: If you are
interested in looking at or buying a foreclosure call us at 214-336-7088 or send an e-mail
to
jay@foreclosuresfrisco.com. We can discuss the possibilities and start right away.
Frisco
foreclosures offer a tremendous amount of value and we also service Allen,
McKinney, Prosper, Plano, Lewisville, The Colony, Sachse, Wylie, Murphy,
Richardson, Carrollton, Flower Mound, and many other areas around DFW.
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