This is the second part of this series. Here is the link to Part 1 of the article. My goal with this series is to hopefully educate a few buyers and investors on the foreclosure and REO process.
Once the foreclosure has been concluded, the bank hires a real estate agent to list the property for sale. The first step in doing this is to find out if the property is still occupied. If someone is still living in the property, the real estate agent is instructed to offer the occupant "cash for keys," typically from $500 to $3000 (depending on the property value) for the person to move out within 15-30 days and leave the property in good condition. If the occupant does not move, then the bank will have their attorney evict them. Once the property is vacant, then the property preservation process begins. Broken windows and doors get boarded or repaired, dangerous conditions get addressed, in northern areas of the country the property gets "winterized" to protect from freezing temperatures, sometimes basic repairs are made to put the property into financeable condition, and lawn service and sometimes pool service is ordered. I have even seen some lenders thoroughly rehab the property themselves so that they can re-sell the property for top dollar but that does not happen often. Most lenders simply sell the property in as-is condition with minimal if any repairs.
(This property that I displayed in the article last week just went pending.)
In the past lenders were more personable and you could actually speak to a human being at the lender's office or in their R.E.O. department if you wanted to buy a property directly from them. I even remember as recently as the mid-1990's negotiating directly with the R.E.O. department at Nationsbank in Winter Park to purchase a foreclosure from them. However times have changed dramatically. It is only on very rare occasions that you can buy a property directly from the bank without involving a middleman. Most direct property buys occur when a group of investors is buying large portfolios of foreclosed homes (we are talking 50+ properties here) with the investor often paying in the tens of millions of dollars for a bulk purchase encompassing multiple states or regions. Sales of smaller amounts of properties will nearly always be handled by national or regional asset management firms (i.e. Ocwen, Litton, First American, etc.) who in turn hire local real estate brokers like me to secure and market these properties.
In upcoming articles of this series, I will discuss in more detail how banks determine value when pricing their REO properties, how to negotiate the best deals, how to determine which REO properties to pursue as an investment versus an owner occupant, and more creative ideas.
Rob Arnold - Your full service and investor friendly Realtor ® in Orlando and Central Florida.
ABR, CPL, CRB, CSP, GRI, Managing real estate broker, Notary Public
We sell foreclosures, short sales, and bank owned REO properties throughout Central Florida. We sell and list Central Florida real estate and Orlando real estate. Free list of foreclosure and short sale houses available.
I also provide flat fee MLS listings, For Sale By Owner, and menu-based services in most parts of Central & South Florida, the Space Coast, and the Treasure Coast including Orlando, Winter Park, Maitland, Ocoee, Winter Garden, Apopka, Altamonte Springs, Casselberry, Longwood, Winter Springs, Oviedo, Lake Mary, Sanford, Deltona, Debary, Deland, Mount Dora, Eustis, Clermont, Kissimmee, Winter Haven, Lakeland, Tampa, Sarasota, Bradenton, Miami-Dade, Fort Lauderdale, West Palm Beach, Port Saint Lucie, Melbourne, Daytona Beach, Ocala, Gainesville, Palatka, Jacksonville, Volusia, Brevard, and more.
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