A. Real Estate Owned. It's the term the
banks use to identify their foreclosure properties.
Q. What is
"Foreclosure"?
A. A procedure whereby property pledged
as security for a debt is sold to pay the debt in event of default in payments
or terms. If a homeowner with a mortgage on their property fails to make
payments on that loan, then the lender will file a law suite to take back the
property for non-payment of the loan. This action is called foreclosure.
Q. How is a HUD property
different from any other foreclosure?
A. HUD homes are FHA-insured
loan foreclosures. When someone with a HUD insured mortgage can't meet the
payments, the lender forecloses on the home; HUD pays the lender what is owed;
and HUD takes ownership of the home. Then we sell it at market value as quickly
as possible.
Q. How are foreclosure
properties identified on the MLS?
A. They are not. They are listed just
like any other property. The best way to find them is by working with a real
estate broker who specializes in this kind of home, or by searching the web.
Q. Doesn't the amount owed
on the property determine what the bank will sell it for? Won't the banks sell
them for less?
A. No. When negotiating with an asset
manager at a bank for the purchase of a foreclosure, keep in mind that this is
a professional seller. A good asset manager will order appraisals and hire a
broker to advise them about the property's condition and value. Then, they
price them accordingly.
Q.Will the
banks repair the properties that are distressed?
A. Sometimes. The asset manager in charge
of the property will confer with his broker prior to listing it to determine if
it is a good candidate for repair or rehab. He will then proceed with a
marketing strategy-either "as-is" or "repaired." Generally,
repairs are cosmetic in nature-paint, carpet, regrouting of tile, replace a
torn screen or door.
Q.How are the negotiations
handled?
A. Once you have determined that you wish
to make an offer on a bank-owned home, you instruct a professional broker
experience in Bank Owned Properties to write the offer. The offer is then
presented to the Bank Seller. The Bank Seller will give him a verbal
acceptance, counter offer or rejection. All negotiations are conducted verbally
until a final agreement is reached between you and the Bank Seller. Once that
agreement is reached either the original contract offer is amended or a new
contract is prepared containing the agreed upon terms.
