Why purchase an REO’s after foreclosure is complete?
Purchasing of properties that have undergone the foreclosure process can occur in two different ways. First, the properties can be sold at the foreclosure auction with the buyer being someone other than the original lender. Other reason was, if there are no bidders at the auction, the lender will get the home back as the high bidder for $100 over the amount of the final judgment in the court action.
If one decided to buy the property at an auction he/she will be purchasing the property that may have major deficiencies with its title, structural issues, property taxes due, illegal structures on the property, un-permitted work, or other issues that can cause the bidder to be sorry later he bought the home. If you intend to bid on a foreclosure property at auction, I suggest you try and see inside the property before the sale
This is does not mean that you are already breaking in to the property, it can be done by contacting the property owner, and asked permission from the homeowner .But be very vigilant like bringing in permission letter in case police attention is called while checking on the property.
One may also do their homework in the public records or get an attorney to do it for you. In fact, an attorney can do a complete and through title search in a matter of minutes or days. He may also do an open permit and code violation search in about a week depending on the local city or county’s code enforcement department.
Some cities would spend time to do it if you come in and others will make you pay and wait for 30 days or more. While going wit the process, one should hire a home inspector to do the inspection if he can get inside the property, but if he is not allowed to do that then , have him do a visual from the exterior to see if he notices any structural issues.
The other way to buy a home that has been through foreclosure is to buy an REO. An REO is a “Real Estate Owned” property that has been through the foreclosure process, and has been purchased at the foreclosure auction by the lender. Often the lender is forced to take a property to the auction to eliminate or eradicate liens or taxis against the property, otherwise the lender would have to assume the responsibility off paying of these junior liens if the homeowner gave the lender a “Deed in Lieu of Foreclosure” and walked away.
When a lender sells an REO property, current taxes should be brought to t e buyer. The property should also possess a clean title meaning no more due taxes and should also be fee-simple.
But purchasing an REO property much better than purchasing a property at a foreclosure auction. There are exceptions but the buyer should be very aware that there are hidden or other issues can make the cheap purchase more expensive than a new home. So as always, do your homework and “buyer beware”.