Don't Buy a Forelcosure, Buy a Post-foreclosure

By
Real Estate Agent with Realty Trust Group

Buying a house in foreclosure is risky business.  Buy a REO instead.  An REO is a bank-owned post foreclosure house.

Title Insurance

Pre -You can obtain a title search as of the date you search, but it costs you $85 in Oregon.  Plus if something happens between the date you search and the date you buy, you are out of luck.  You have to make sure that there aren't more liens on the property than it is worth.  There are no property disclosure requirements so there could many hidden defects - such as property lines disputes.

Post-you will receive a standard owners policy and all liens paid off.

Sale Dates

Pre-You can find some foreclosures and information the sale date by searching usa-foreclosures.com., the local paper, or a title company.  The dates can be postponed though on the court house steps.

Post- You have a say on closing date

How much?

Pre- Sometimes the usa-foreclosures.com site will even post the minimum bid amount.  Sometimes, the opening bid is not really a "good deal".  Just because it is a foreclosure does not mean it is really cheap. I recently saw the opening bid amount that was the same price as the standard homes on the market.  Plus you have to pay cash that day for a foreclosure.

Post-The bank is now pretty realistic and the property is priced sell.

Condition

Pre- Since you won't be able to have an inspection before you buy, you could buy yourself a big headache.

Post- You can have an inspection and decide if you want to buy.

Bottom line- Most times it is better to buy an REO

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Rainmaker
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Karen Pierce
Karen Pierce | Housing Counselor |Oregon - Medford, OR

Krista - you make great points. Our friends who are buying in Nevada found out exactly the difference between Pre and Post...their offer on the Pre did not go through in time, and the property went back to the bank. Their 2nd offer on the Post-foreclosure/REO looks like it is going to be accepted, and they'll be moving in to their new home in a little over a month.

Jul 21, 2008 06:13 PM #1
Rainer
19,404
Edie Lomason
Michael Saunders & Company - Venice, FL
BA, ABR

Really read those bank contracts thoroughly.  I just went to a class given by a local RE Attorney and he pointed out how the contract is extremely biased toward the bank.  The bank (REO Seller) can decide not to sell to the buyer at any point in the contract process without explanation - even at the closing table before docs are signed. Pretty scary if the buyer has moved from another state and has a moving van in the parking lot waiting to close.  I guess all these challenges are why we love this job! 

Jul 22, 2008 10:01 AM #2
Rainmaker
147,122
Krista Laulainen
Realty Trust Group - Portland, OR
Portland - Homes & Real Estate for Sale

Stepahn - I appreciate your comment about "it is cheaper to sell property without out an agent".  However, there is a difference between gross costs and net costs.  Usually, it is actually less expensive to buy using an agent when you factor in all things, including risk.  Ask an attorney and they will tell you "you can pay and agent now or pay me later"

Jul 23, 2008 02:35 PM #3
Rainmaker
147,122
Krista Laulainen
Realty Trust Group - Portland, OR
Portland - Homes & Real Estate for Sale

Edie- You are right the REO's contract definetly favor their risks and rights, but even so it is better than buying at the courthouse.

Jul 23, 2008 02:36 PM #4
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Rainmaker
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Krista Laulainen

Portland - Homes & Real Estate for Sale
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