If you are interested in REO or Short Sale properties there are a few things to keep in mind.
- Short Sale homes can take longer to process than REO’s. It really depends on the lender and the process they use to move these homes through their system. Many of the larger banking institutions are now using the Equator system, which is a computer platform that allows the negotiators to organize large batches of files. There is very little person to person contact with this system, however it is very efficient. The down side to the Equator system, from my past experience, is that I have never received a signature that the deal has been Okayed, even though we progress towards a closing. This can make a buyer very jittery for obvious reasons.
- REO properties are generally managed by an out of state asset Management Company. The condition of these homes is generally ok to poor. As a buyer you will want to do your homework on these homes before purchasing. You will most likely need an attorney since their addendums are not on approved Wisconsin forms. Only an attorney can interpret and give advice on these forms.
- Just because the home is in distress does not automatically mean you will get a “steal” on the price. Be prepared before writing an offer.
- Short Sale properties will require lots of information about you the buyer IF you want to be considered by the lender.
- Some Short Sale properties will require the seller’s permission, the lenders permission and the investors’ permission to sell. If the seller has declared bankruptcy you will have to wait for the courts permission as well. These are things you should know before spending lots of time waiting for your dream home.
- REO sales can change on a dime. If you have submitted an offer on a REO and have received verbal acceptance, this DOES NOT mean you will end up with the house. If another offer comes in after your offer for more money or better terms, the banks will most likely take that deal despite what they have told you. BUYER BEWARE.
All in all it sounds like a hassle, but remember the old adage, with much risk there is great reward. Your professional Realtor can help you decide if that property is indeed a good value.
Glenn Hanon, Shorewest, REALTORS®
Categories: Home Buying