Buyers tip of the week!

Defaulted properties are a sad fact of the real estate market. Mortgage foreclosures are a multiple-step process,
presenting various buying opportunities. When a foreclosure sale is not successful, the lender assumes ownership
and the property is now called real estate owned, or REO. If you are interested in purchasing an REO
it’s important to understand several distinctions between REOs and traditional transactions.

Seller – is a homeowner or investor who wants the right
price, favorable terms and timely closing.

Seller – is a lender, represented by an asset management
company, that wants a quick sale at or above a bottomline price.

Listing Agent – chosen by the seller.

Listing Agent – assigned by the asset manager.

Occupancy – the seller vacates the property on or before

Occupancy – the property may be vacant, abandoned,
or in foreclosure limbo; eviction of former owner/tenants
may be needed.

Property Condition – sale-ready condition, possibly
including upgrades to enhance its value; cash or credit at
closing for repairs.

Property Condition – varies greatly. May be at risk for
vandalism and damage; possible price reduction to offset

Contingencies – are negotiable and may include a
property inspection, the sale of current home, mortgage
approval, or final walk through.

Contingencies – property is offered as-is, where-is. An
inspection and final walk through are allowed.

Offers – the buyer offers a sales contract, along with
earnest money. The seller can accept, reject or

Offers – the buyer’s sales contract must include proof
of funds or pre-approval. The seller can accept, reject,
counter, ask for highest and best offer, or make the offer
subject to upper management approval.

Negotiations – include price, terms, closing date and
contingencies. Goal is to create a win-win for the buyer
and seller.

Negotiations – only includes price and closing date.

Buyer is looking for a bargain; seller wants a bottom-line
price and loss mitigation.

Disclosures – government-mandated disclosures along
with a seller’s disclosure.

Disclosures – government-mandated disclosures. No
seller’s disclosure, unless defects were found in prior

Closing – is negotiable; seller may agree to extend. Buyer
can specify title company.

Closing – firm closing date, with per diem charged for late
closing. Seller specifies title company.

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