Frequently Asked Questions

What is a REO? What is the difference between a foreclosure and an REO?

REO is an acronym for Real Estate Owned. This is a bank term for real estate they own, versus real estate they have liens on. In short, once the bank has foreclosed on a property and they own it, it is referred to as an REO.

A foreclosure is a property which is in default and the bank has initiated foreclosure proceedings on the property. The property still belongs to the homeowner during this period. Depending upon the state, this can take from a few months to over a year. The foreclosure process will end with a sale and ownership of the property will transfer at that time.

Are your houses REO's?

Technically, no. The property is technically only an REO while owned by the financial institution that foreclosed on it. We buy these REO's in bulk for various banks and servicers. Our volume acquisition allows us to obtain great pricing. We then wholesale the properties to investors who will either make rentals out of them, or rehab the asset and sell it in the retail market.

What is a QCD?

QCD is an acronym which stands for Quit Claim Deed. They used to be relatively uncommon, however in the last few years the use of Quit Claim Deeds has risen dramatically. The servicers and banks have been using QCD in their bulk and pool sales for quite some time now. In some states, like Texas, QCD's are not recognized. In these states banks typically issue Special Warranty Deeds.

A QCD is a deed whereby the seller simply deeds his/her interest in the property to the buyer. This deed has no bearing on someone else's, if any, interest in the property etc. A buyer must understand how to research property title. Fortunately, most of this information is available on the county websites.

How does title work on a QCD? Is there any warranty?

There is no title work or warranty with a QCD transaction, however that does not mean the buyer can not obtain a title policy. The reason sellers use Quit Claim Deeds is to have a simply net income calculation on the sale. In other words, if you purchase a property for $20,000 on a QCD transaction, the net to seller is $20,000. There are no pro-rations, title policy, etc. But if the buyer wishes to purchase those from the title company at closing, he can always do so. However the expense of that will fall on the buyer, not the seller.

Should I buy the QCD or the full Warranty Deed?

We price our properties with both a full Warranty Deed sale price and a QCD sales price. The difference between these two is such that the QCD generally makes more since that's how we designed it. Why? QCD's are much faster to close and much easier for us to calculate the return on the deal when the offer is made, as we don't pay anything at closing. With a QCD, the total cost to you, the buyer, is the QCD contract price, the title company closing fee to manage the transaction (as escrow officer). Any taxes or other outstanding fees associated with the property can be paid at a later date, but do not affect closing. On a Warranty Deed transaction, the buyer will pay the contract sales price, plus closing fee, filing and recording fees, his/her pro rated share of taxes, etc. The actual amount due at closing is usually substantially higher than the sales price. In most cases the buyer can call the county and find out how much, if any, is due in taxes/water. The QCD purchase price, plus the taxes/water due, should be significantly less than the Warranty Deed price. The buyers also are not required to pay the taxes due at closing. You can pay those over time, say out of rental income cash flow, as long as they are paid prior to becoming liens.

Is there liability when purchasing a QCD?

Yes. The assets we sell have recently been foreclosed on by a bank. Liens that were subordinate to the mortgage were "wiped off" at foreclosure. However any government liens / fees (property taxes/water bills/code violations) would not have been satisfied. A simple country search and/or phone call and call alert you to any potential government liens. Occasionally, a lien holder was not named in the original foreclosure, therefore their lien was not released in the foreclosure. This is rare, and a legal mistake, but it does happen. Most of this can be researched by calling or going to the county seat office and searching the records. In many cases it can be done online, depending upon the county.

What is redemption? What about seasoning?

In many states, after the foreclosure is executed at the auction, there is still a period called the "redemption period". Although the ownership of the property transfers at the auction from the homeowner to the bank (in the case of a foreclosure), the old homeowner still has the right to redeem the property. They can do so by paying what was owed on the house, plus substantial penalties and interest. It is almost unheard of for a property to be redeemed. Redemption periods vary by state, with most being in the 30-90 day range, while many states have a 6 month redemption period. During the redemption period you can still obtain a title policy on the property with an exclusion of the redemption.

Seasoning is simply a term used to describe how long a property has been owned by a particular entity. The reason seasoning is important is, if an investor is planning on purchasing a property for resale, they need to consider the current FHA seasoning requirements. Currently FHA has a 90 day seasoning requirement, meaning you must have been on title for a minimum of 90 days before they will approve financing on that property.

Who We Are:

The current real estate market has overwhelmed the servicing and banking industries. Traditional methods of disposition simply are not effective in this market. As such, banks have relied more heavily on pool and bulk sales. That is where we come in. We work with numerous national servicers, banks, hedge funds and asset management companies to acquire pools of residential real estate. These are acquired in bulk via Quit Claim Deed (QCD).

Realizing that all real estate is local, we focus on finding local real estate investors who will rehabilitate the property and either sell it to an eventual home owner or rent it. The goal, in either case, is to not let the property sit vacant. Both the local community as well as the real estate industry only benefit if/when the property is occupied. Once a local real estate investor owns the property, it will be rehab'd and occupied. How can we say such a thing? Because the local real estate investor does not let their investment simply sit there. Whereas banks and large investment groups can afford to have the house sit vacant, local investors can not and will not leave the property vacant. It's a simple matter of economics. As such, we play a vital role in the economic recovery and rehabilitation of the hardest hit areas of the real estate crash.

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