Foreclosures, REO's and Lender Sales Listings FAQ
Foreclosures, REO's and Lender Sales all are essentially the same thing.
Positive Aspects of
Foreclosure Properties that are REO's and Lender Sales:
A foreclosure, AKA a lender
sale or REO (Real Estate Owned), can be a great opportunity for homebuyers with
many immediate financial benefits, as well as negatives. A foreclosure occurs
when a homeowner defaults on loan payments and the lender files a public default
notice. Oftentimes, the lender will take ownership of the property with the
intention of re-selling it again. Prudential Location's Hawaii foreclosure listings only include these
specific types of listings.
The seller in this type of transaction is a bank that owns the property outright.
This can be advantageous to buyers due to the fact that the bank wants to sell the
property quickly since they do not want to tie up their money in unoccupied homes.
This often results in the bank listing REO (Real Estate Owned) properties below
market value to encourage a quick sale.
In addition, buyers for this type of property work directly with the property owner
(bank) throughout the sale, as opposed to a short sale in which the buyer has to
deal with both the home seller and the lender (who loaned the seller money when
the seller initially purchased the property).
Working directly with the property owner tends to eliminate the significant time
lags that are frequently seen in short sales,
and tends to promote a more smooth and trouble free closing. View our
Lender Sales and
REO listings and see if there is a property that makes sense
for you!
Negative Aspects of Foreclosures:
No disclosure statement from seller (bank)
In a normal property purchase, the seller always prepares a property disclosure
statement detailing any problems/issues with the property that the seller is aware
of. In a foreclosure purchase, the buyer purchases the property directly from
the bank, and because no one from the bank has actually lived in the property, there
is no disclosure statement provided to the buyer. This can be detrimental
to the buyer because there can be any number of unforeseen problems with the property,
which may not become apparent until after the property is under contract.
Property is purchased as is
It is also worth noting that in every foreclosure sale the property is purchased
“As Is,” meaning that the seller will not pay for any repairs that are
needed. Essentially, what you see is what you get, so buyers need to be very
diligent in assessing potential damage to the property, and in determining a realistic
value for the property. Utilizing a seasoned and knowledgeable real estate
agent can be a huge benefit and is often essential in determining a realistic offer
price.
Contract Verbiage
Other potential issues for buyers is that the verbiage of a foreclosure sales contract
tends to be worded in a manner that minimizes the liability to the bank and prevents
recourse from the buyer should any issues come up with the property after closing.
There is also potential for title issues relating to how the foreclosure was
initially recorded.
As a result, buyers of REO, lender sale and foreclosure properties should always
consult with a seasoned real estate agent to make sure that their needs and best
interests are being represented.