How to Buy a Foreclosure on the Big Island of Hawaii
HOW 2 BUY BANK OWNED PROPERTIES on the Big Island of Hawaii
There is a lot of people talking story about buying bank owned properties in Hawaii. There’s lot of information being shared some good and some bad. You’ll even find infomercials & seminars that will tell you how to get rich. (once you pay for their “secret formula”). The fact is, that there are no secrets, and to make money requires plenty of effort.
What’s an REO?
REO stands for “Real Estate Owned”. These are properties that have gone through foreclosure and are now owned by the bank or mortgage company. The REO property did not find a buyer during foreclosure auction and the bank now owns it. The bank will see to the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing. Do be aware that REO’s may be exempt from normal disclosure requirements. In Hawaii, for example, banks are exempt from giving a Seller’s Disclosure Statement, a document that normally requires sellers to tell you about any defects they are aware of.
Is it a Bargain?
It’s commonly assumed that any REO must be a bargain and an opportunity for easy money. This simply isn’t true. You have to be very careful about buying a REO if your intent is to make money off of it. While it’s true that the bank is typically anxious to sell it quickly, they are also strongly motivated to get as much as they can for the property. When considering the value of a REO, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the home for resale. The bargains with money making potential exist, and many people do very well buying fixers. You also need to remember there are also many REO’s that are not good buys and not likely to turn a profit.
Ready to Make an Offer?
Before making your offer, you’ll want to contact your Realtor to find out as much as you can about the property and what the banks process is for receiving offers. Since banks almost always sell REO properties “as is”, you’ll want to be sure and include an inspection contingency in your offer that gives you time to check for hidden damage and terminate the offer if you find it. As with making any offer on real estate, you’ll make your offer more attractive if you can include a pre-approval letter from a local lender. After you’ve made your offer, you can expect the bank to make a counter offer. Then it will be up to you to accept their counter, or offer a counter to their counter offer. Realize, you’ll be dealing with a process that probably involves multiple people at the bank on the mainland in different time zones and they don’t work evenings or weekends. It’s not unusual for the process of offers and counter offers to take days or even weeks and sometimes these transactions can take several months to close.
Now you know the Secret to Buying REO’s. It is hard work and can take a lot of time. If this type of challenge doesn’t scare you, then maybe investing in REO’s is for you.
For more information contact:
Howard Dinits (R)B at Dinits Realty
877-434-6487 or via e-mail Howard@HowardDinits.com