Foreclosure vs. Bank Owned/REO 101

I know what you are going to say, because I hear it almost every day  "I saw on TV that foreclosures are a great deal" or "My Uncle, Brother, Barber, Friend said that their friend bought a $300,000 house for $19.95" OK, I might have exaggerated those a little but not by much. I am not saying that there aren't some great deals out there because there are, but lets just say they are not as easy to find as some people may think

So I have provided this brief introduction to hopefully show that no matter how easy HGTV makes it look, you still need to be cautious, and know what you are looking for.

Foreclosure - The lender or bank is selling or repossessing a piece of property because of non-payment by the owners.

If you are truly looking to pick up a foreclosure then you will be combing the newspaper or the internet looking for notices of foreclosure. (please do not ever pay anyone for this information, it is all public record and can be found with minimal effort) You will be responsible for going to the home and arranging any inspections you may want with the homeowner (who may not always be happy to see you trying to buy the house that is being taken from them) and all this is before you go to the auction and bid on the house. Then the best part is even if you place the winning bid the bank may not accept it anyway. Oh yeah, also in most cases you will have to put up a lot of cash to complete the purchase. I am not saying it is impossible, or that you couldn't do it, I am just saying you better know what you are doing or you can find yourself in over your head really quickly.

Bank Owned or REO (Real Estate Owned):

My guess is this is what you are looking for. The home either didn't sell at auction, or the bank did not accept the winning bid. The bank has completed the foreclosure process and now have listed the property for sale as the owner. These homes are much easier to find, since all you have to do is ask me! There are great bank owned deals out there but not all of them. Is it a good deal if the home is 30K under the other homes in the nieghborhood? well not if it needs 40K in work. Many of these homes are in poor condition, or have other less obvious problems. The key is recognizing these problems and how they affect the value of the home. You also have the pleasure of negotiating with large banks and corporations who not only have layer upon layer of rules and red tape, but in most cases the person you are dealing with has probably never seen the house in person.

Also, Foreclosures, Bank Owned Homes/REO's are AS-IS purchases. To spell it out, the bank is not required to fix anything! Not before the closing and especially not after! The buyer is responsible to have any inspections they want done prior to closing and on their own dime. If you do not have the inspections done, or you miss something and 2 weeks after closing your bed falls through the kitchen ceiling due to termite damage don't bother calling anyone, it's your problem. If only you had a great agent, who could use his home inspector training to help you make sure you get the right inspections, and who was such a strong negotiator he could possibly have the bank offset the cost of needed repairs by lowering the price, that would be great! The best part of the whole thing is that this great agent costs you nothing! The same bank that he has just hammered to get you the best deal has to pay his commission! In case you didn't pick up on it, the agent in the paragraph above is me. I hope this very basic introduction to Georgia foreclosures, Georgia Bank Owned Properties and Georgia REO has been helpful!

The Muller Realty Group has a proven track record of sucessfully finding these homes and negotiating the best deal available for our clients. I would be happy to share some testimonials with you from some of our very happy clients who purchased a bank owned home, just email me your request.