Links open in a new window, please allow pop-ups or hold 'Ctrl' while clicking on a link. Page updated 1/03/2012. There is one foreclosure property listed at this time.
What is a Foreclosure or REO property?
When a property is sold through a foreclosure auction, its owner usually owes more to the lender than the market value of the property itself. This is often a barrier to selling the property, and sometimes such foreclosure auctions do not draw any bidders. As a result, not many foreclosure auctions end with the sale of the property, rather the title reverts back to the financial institution holding the lien. Properties in this category are referred to as REO (Real Estate Owned) properties.
After the bank takes possession of the property, the mortgage loan disappears and the financial institution deals with any items owed by the prior borrower, such as homeowner association fees. The financial institution also tries to get the IRS to remove any tax liens against the property. The current owners are usually evicted and often repairs are made to damage on the property in order to make it more attractive to potential buyers.
Banks are trying to get the maximum return when they sell an REO property directly. They want to sell them quickly for two main reasons: first, they don't want to tie up their money in capital reserves they are required to set aside for a foreclosed property, and second, the management of such properties is a headache they would rather not have.
However, banks are very sophisticated when it comes to managing REOs and foreclosures, often having a department dedicated to them. The selling process starts when a potential buyer makes an offer to the financial institution, which is gone over by its management. Often, the institution will make a counteroffer, and the buyer may respond with another offer. After they have agreed on the price, terms, and conditions, a contract for the sale can be made.
When preparing to make an offer, a potential buyer needs to look at what comparable properties in the area are worth, along with the cost of any needed repairs. Financial institutions usually sell such properties as-is, which makes the buyer's inspection even more important. If they discover damage that they did not anticipate, which the institution will not repair, they can then cancel the transaction within the due diligence period and get their deposit back.
Foreclosures are properties that already have had problems that often include lack of maintenance, substantial repairs, and often needed improvements that cost a significant amount of money, and any buyer looking to buy such a property needs to keep this in mind at all times.
Typical foreclosure homes in Tuscany Village are properties built in 2005-2006 and sold in a very high market. Most homeowners used exotic mortgages to finance their purchase, including short term adjustable interest only mortgages and negative amortization products. With the price correction in the 2007-2011 those homeowners found themselves unable to keep up with mortgage payments and defaulted on their loans. Those properties are generally in a good condition, and if priced right, attract a lot of interest. Some foreclosure listings receive multiple offers within days of price reduction and may sell above asking price.