REO stands for Real Estate Owned which is a property that is sent back to the mortgage company after foreclosure. Foreclosure results when an owner fails to make payments on a property. The lending institution is then allowed to put the home or property up for sale in an attempt to make back some of the money lost from the former owner’s failure to pay. Wells Fargo is one of the many lenders that owns foreclosures in Bryan and College Station. Wells Fargo offers a PAS (Premier Asset Services) division to help manage this complicated process.
There are a few steps in getting started. If you have been considering buying a REO home from Wells Fargo, there are a few helpful considerations you should make prior to buying the home.
Get prequalified by calling a Wells Fargo representative. You can find out how much you are able to purchase and will know what types of homes fit your budget. You may get a pre-qualification letter for free. This requires you to fill in your basic financial information and will map out for you how much you are able to spend. All foreclosures owned by Wells Fargo will require the buyer to be prequalified by a Wells Fargo representative even if the purchaser is borrowing money from another lender.
Your local home mortgage consultant should be able to provide you with a preapproval letter. This letter will allow you to bypass delays and other roadblocks to your financing and purchase offer letter. Preapproval letters indicate to buyers that you are serious about purchasing a home, and it offers more detailed information about your financial records.
If you get a PriorityBuyer preapproval letter, this sends the message to real estate agents and to homeowners that you already have your financing already prepared.
Work with a real estate agent in your area. Choose an agent that represents you to help you find your home. And, make sure the agent has represented buyers in the purchase of foreclosure properties. Managing a foreclosure transaction is NOT the same as managing one with a “normal” seller.
Finding the property is the next step and is something on which you can work with your real estate agent. If you are particularly interested in REO properties, you can go online to view these properties that are managed by PAS. The website to locate these properties is http://reo.wellsfargo.com/. You can enter your preferences on the site and choose to receive notifications when properties in your area become available.
Next you will want to view the property. To do so, you and your real estate agent can contact the PAS listing agent to set up a time. This agent will be your way of communicating with the homeowner. Remember there may be a time where a property appears on the PAS website but the property is not truly on the market and available to view yet.
Once you have viewed the property, review it with your real estate agent and then have the buyer’s agent discuss offers with the listing agent. These REO homes are expected to sell at market value. The home’s condition will be taken into account in comparison with the current market.
If you are financing a REO property, it is necessary to include the following with your offer to the local agent: a prequalification letter, a credit approval letter, a credit-decisioned preapproval letter, and if you are a cash buyer, proof of funds is necessary while a prequalification letter is not.
PAS requires a waiting period for their REO homes in order to ensure all groups equal opportunity to make their offers on the property. If you are interested in finding out the specific time frames for a property, check with your local listing agent. If you submit your offer on a weekend, it will not be reviewed until the following business day.
After this period, you may continue the loan process. You will immediately need to notify your home mortgage consultant to continue the process of your loan. Make sure that you submit all of your loan documentation in a timely manner so you will not have to worry about delays.
The following is a REO property purchase checklist for the real estate agent:
Remember to submit offers with a prequalification letter from Wells Fargo or a Wells Fargo joint venture.
Make sure that the timeline of the loans is not behind schedule for required payments. Check the purchase contract dates to make sure the loans have enough time to close and process. The advisable time period is 40-60 days.
Remember that the listing agent is your immediate contact to the seller. Communicate with them.
Communicate also with the listing agent as they are the ones to ensure that utilities are turned on for inspections and appraisals of the property.
Prepare the buyer for a longer transaction timeframe with the REO. Communications and approvals must be looked over and considered by many individuals before a response can be generated.
Instruct your buyers to offer “their best” because multiple offers will likely occur.
Wait to hear from the REO’s listing agent on whether or not the buyer’s offer is accepted.
For the buyer, here is a small checklist:
Communicate well with your real estate agent to ensure that you understand all terms clearly and fully. Prices are normally determined by the condition of a property, which is typically sold as it is. Learn what you can about the structural condition of the property including HVAC (heating, ventilation, air conditioning), indoor plumbing, well, and septic system.
After your offer is accepted, it is suggested that you get an inspection done of the home.
Be punctual when it comes to submitting your mortgage loan documentation. You may need the following: driver’s license, social security card, other identification, income and employment information, and credit information.
Wells Fargo Home Mortgage consultants are happy to speak with you about financing options if you are considering a REO home. Wellsfargo.com/mortgage offers potential buyers resources such as exclusive buyer guides and planning tips.
Century 21 Beal, Inc. has MANY real estate agents who specialize in working with buyers purchasing foreclosures in the Bryan College Station area. So, CALL ME!
PS – Susan Hilton is Bryan College Station, Texas’ real estate specialist in foreclosure sales and real estate agent career building so if you need help –