Savvy consumers will turn to a seasoned pro when considering the purchase of a foreclosed property.
What's an REO?
"REO" is Real Estate Owned. These are houses which have completed the foreclosure process and are currently possessed by the bank or mortgage company. This differs from real estate up for foreclosure auction.
If you buy 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. The buyer must also be ready to pay with cash in hand. To top everything off, you'll receive the property completely as is. That possibly could consist of existing liens and even current denizens that need to be evicted.
A bank-owned property, on the contrary, is a much cleaner and attractive proposition. The REO property didn't find a buyer during foreclosure auction. Now the lender owns it. The lender will take care of 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.
Note that REOs may be exempt from normal disclosure requirements. For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement, a document that normally requires sellers to disclose any defects of which they are knowledgeable. By hiring Wilkinson & Associates, you can rest assured knowing all parties are fulfilling North Carolina state disclosure requirements.
Am I assured a good deal when buying a bank owned property?
It is frequently assumed that any REO must be a good deal and an opportunity for guaranteed profit. This isn't necessarily the case. You have to be cautious about buying a repossession if your intent is make a profit. Even though the bank is typically anxious to offload it promptly, they are also looking to get as much as they can for it.
When pondering the value of REO property, 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. But there are also many REOs that are not good buys and not likely to turn a profit.
Prepared to make an offer?
Most banks have a department dedicated to REO that you'll work with when buying REO property from them. To get their properties advertised on the local MLS, the lender will frequently hire a listing agent.
Before making your offer, you'll want to contact either the listing agent or REO department at the bank and discover as much as you can about their knowledge about the condition of the property and what their process is for accepting 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 withdraw 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, it's customary for the bank to make a counter offer. At this point it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer. Understand, you'll be contending with a process that most likely involves a group of people at the bank, and they don't work evenings or weekends. It's typical for there to be days or even weeks of going back and forth. Wilkinson & Associates is are used to working around the schedules of this type of seller and will do everything possible to ensure there are no unnecessary delays.
Wilkinson & Associates 8903 E Oak Island Drive Suite 3 Oak Island, NC 28465
When pondering the value of REO property, 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. But there are also many REOs that are not good buys and not likely to turn a profit.
