Panama City Beach Homes for Sale

What is a REO?

What’s an REO?

REO stands for “Real Estate Owned”. These are properties that have gone through the foreclosure process including a public auction at the Courthouse steps and are now owned by the bank or mortgage company. A REO, by contrast, is a much “cleaner” and attractive transaction. The piece of Panama City Beach REO Real Estate did not find a buyer during the foreclosure auction. The bank now owns it. The bank will see to the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing. Do be aware that REO’s may be exempt from normal disclosure requirements.

Buying Bank Properties

In this current Panama City Beach Real Estate market there is a lot of interest in buying bank owned properties (Foreclosures/REOs). There is an abundance of good and bad information out there. More times than not the information offered is for sale, and features a promise that you can make a lot of money with little effort once you know “the secret formula”. These services typically get you to buy a book first and then follow up with you to encourage you to buy a system or a “training program”. These people’s main goal is to not buy and sell real estate but rather sell their programs as you probably will never talk to the person the program is endorsed by (Carlton Sheets, John Alexander, Dean Graziosi). The fact is that there are not any secrets, and to make money does require effort.

Foreclosure Sale

When buying Panama City Beach Real Estate during a foreclosure sale, you must pay at least the loan balance (unless the lender is willing to discount) plus any interest and other fees accumulated during the foreclosure process. You must be willing and able to pay for the Panama City Beach Real Estate with cash in hand. You must also be willing to satisfy any other liens on the property which may include property taxes as in the state of Florida property taxes have priority over all other existing liens. A title insurance policy would not be able to be obtained prior to purchase. In addition to all of this, you must be willing to take the property “As Is”. You may also be forced to evict tenants/squatters.

Is it really a bargain?

It’s assumed that any REO must be a bargain and an opportunity for easy money. This simply is NOT true. You have to be very careful about buying a REO if your intent is to flip it. It is true that the bank is typically anxious to sell it quickly however, like any other seller they are strongly motivated to get as much as they can for the property. When considering 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. This is specifically vital in a declining market. If the Panama City Beach Real Estate market is declining you may be upside down on the property as soon as you close as the market could have declined from the time your offer was accepted and your closing date. If you still have repairs to do on the property and the market continues to decline you could risk losing a great deal of money if you do not have the resources to carry the Panama City Beach Real Estate. The bargains with money making potential exist and many people profit extremely well buying foreclosures. But there are also many Panama City Beach REO’s that are not good buys and not likely to turn a profit.

Ready to make an offer?

Most banks have a REO department that you’ll work with in buying a REO property from them. Typically 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 find out as much as you can about what they know about the condition of the property and what their process is for receiving offers. Since banks almost always 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 terminate the offer if you find any. In most cases today, listing agents have been instructed by the lending institution that all offers must be accompanied by a pre-approval or letter of credit from the buyer’s bank. After you’ve made your offer, you can expect the bank to make a counter offer. Then it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer. Realize, you’ll be dealing with a process that probably involves multiple people at the bank, and they don’t work evenings or weekends. It’s not unusual for the process of offers and counter offers to take days or even weeks so patience is very important.