Interested in REO property or a foreclosure in ?
What's an REO?
"REO" is short for Real Estate Owned. These are houses which have been foreclosed upon that the bank or mortgage company presently holds. 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 accumulated during the foreclosure process. You must also be ready to pay with cash in hand. And on top of all that, you'll get the property completely as is. That possibly will comprise of standing liens and even current denizens that may require removal.
A bank-owned property, on the other hand, is a much neater and attractive deal. The REO property did not find a buyer during foreclosure auction. The bank now owns it. The lender will take care of the removal 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. For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement, a document that typically requires sellers to make known any defects they are aware of. By hiring Kerry Mills, you can rest assured knowing all parties are fulfilling North Carolina state disclosure requirements.
Are REO properties a bargain in ?
It's sometimes assumed that any REO must be a good buy and a possibility for easy money. This simply isn't true. You have to be cautious about buying a REO if your intent is to make money. While it's true that the bank is typically anxious to offload it fast, they are also looking to minimize any losses.
Look closely at the listing and sales prices of similar properties in the neighborhood when making an offer on an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in. There are bargains with potential to make money, and many people do very well buying foreclosures. Still, there are also many REOs that are not good buys and not likely to turn a profit.
Time to make an offer?
Most banks have staff dedicated to REO that you'll work with in buying REO property from them. Typically the REO department will use a listing agent to get their REO properties listed on the local MLS.
Before making your offer, you'll want to contact either the listing agent or REO department at the bank and find out as much as you can about what they know regarding the condition of the property and what their process is for receiving offers. Since banks usually sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for unseen damage and retract the offer if you find it. As with making any offer on real estate, providing documentation showing your ability to pay may make your offer more attractive, such as a pre-approval letter from a lender.
After you've presented your offer, you can expect the bank to counter offer. Then it will be your decision whether to accept their counter, or make another counter offer. Be aware, you'll be dealing with a process that probably involves several people at the bank, and they don't work evenings or weekends. It's not uncommon for the process of offers and counter offers to take days or even weeks. Kerry Mills is accustomed to these situations and will work to ensure there are no undue delays.