If you’re buying an REO property, don’t forget the old song that goes: “Baby, if you wanna dance, you gotta pay the band.” As a Tampa mortgage broker I can tell you that real estate owned properties can yield decent deals, but the rules for these home sales are completely different, they’re set by the people holding all the cards: the bank.
There’s a whole breed of law firms acting as title companies representing the banks (as the sellers). While the intervention of real estate attorneys is mandatory in some states, the transaction to buy a home in Florida is typically handled by a title company and the rules are pretty consistent from deal to deal.
But if the property you are buying is an REO and since you are buying it from a bank via their attorneys, there can be a host of conditions that you wouldn’t have to contend with in a traditional resale. Just a few things to be aware of:
• Some closing attorneys require the buyer to pay for their insurance in advance of closing rather that at closing
• The attorneys need to have the mortgage loan package from the lender 72 hours in advance which in effect shortens the time period a lender has to approve the loan
• Funds for closing must be wired, no certified checks allowed at closing
• The attorneys office is usually out of town so you will have to pay for a remote closer
• Some banks try to make the buyer pay some of the typical seller costs (so read your contract!)
• Their fees are usually 30%-50% higher than a typical resale
The caveat here is just to expect the unexpected, make sure you understand every facet of a great deal, and remain aware of who’s running the show. You gotta pay the band, man.