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.