Purchasing REO property or a foreclosure?
|Smart consumers will turn to a seasoned pro when considering a foreclosed property. Should you have questions regarding real estate in North Carolina, call me or send me an e-mail.|
What's an REO?"REO" is short for Real Estate Owned. These are houses which have completed the foreclosure process and are now possessed by the bank or mortgage company. This differs from real estate up for foreclosure auction.
When buying a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees amassed during the foreclosure process. You must also be prepared to pay with cash in hand. Finally, you'll get the property entirely as is. That possibly will involve current liens and even current denizens that may require removal.
A bank-owned property, on the contrary, is a more tidy and attractive option. The REO property didn't find a buyer during foreclosure auction. The lender now owns it. The lender will see to the elimination of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.
Take notice that REOs may be exempt from typical disclosure requirements. In California, for example, banks are exempt from giving a Transfer Disclosure Statement, a document that usually requires sellers to tell you about any defects they are knowledgeable of. By hiring Real Estate Advisory Services Inc, you can rest assured knowing all parties are fulfilling North Carolina state disclosure requirements.
Am I assured a bargain when buying an REO property in Hickory?It's frequently believed that any REO must be a good deal and an opportunity for guaranteed profit. This isn't always the case. You have to be prudent about buying a REO if your intent is make a profit. While it's true that the bank is often eager to sell it quickly, they are also looking to get as much as they can for it.
When pondering what to pay for a foreclosure, 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 house for resale. It is possible to find REOs with money-making potential, and many people do very well flipping foreclosures. Still there are also many REOs that are not good buys and may lose money.
All set to make an offer?
Most mortgage companies have a department dedicated to REO that you'll work with while buying REO property from them. Commonly the REO department will use a listing agent to get their REO properties listed on the local MLS. Real Estate Advisory Services, Inc., is one of those agencies. We list REO's for Peoples Bank!
Before making your offer, you'll want to contact us and discover as much as you can about the condition of the property and what our process is for getting offers. Since banks most commonly sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for hidden damage and cancel the offer if you find it. If, as a buyer, you can provide documentation demonstrating your ability to pay, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This is generally true for any type of real estate offer.)
After you've presented your offer, it's customary for the bank to counter offer. From there it will be up to you to decide whether to accept their counter, or submit another counter offer. Understand, you'll be contending with a process that probably involves multiple people at the bank, and they don't work evenings or weekends. It's not unusual for there to be days or even weeks of negotiating back and forth. However, since Peoples Bank is our parent company, we can get answers on offers usually the same day!