Making an offer on REO property or a foreclosure in Hickory?
Foreclosed upon and bank owned property purchases require the assistance of an experience professional.
For more information, just contact me through my site or e-mail me. I'm happy to answer questions you have about real estate foreclosures.
What is an REO?
"REO" is short for Real Estate Owned. These are properties which have gone through foreclosure and are now possessed by the bank or mortgage company. This is unlike 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 accrued during the foreclosure process. The buyer must also be able to pay with cash in hand. Finally, you'll receive the property totally as is. That possibly may consist of existing liens and even current tenants that may require expulsion.
A bank-owned property, by contrast, is a much neater and attractive transaction. The REO property did not find a buyer during foreclosure auction. The bank now owns it. The lender will handle the elimination of tax liens, evict occupants if needed and generally arrange for the issuance of a title insurance policy to the buyer at closing.
You should be aware that REOs may be exempt from standard disclosure requirements.
In California, for example, banks do not have to give a Transfer Disclosure Statement,
a document that usually requires sellers to tell you about any defects they are knowledgeable of.
By hiring Faith Parker Properties, you can rest assured knowing all parties are fulfilling North Carolina state disclosure requirements.
Is REO property in Hickory a bargain?
It's commonly assumed that any foreclosure must be a good deal and a possibility for guaranteed profit. This often isn't true. You have to be cautious about buying a REO if your intent is to profit from the sale. Even though the bank is often anxious to sell it fast, they are also motivated to get as much as they can for it.
When contemplating the value of a foreclosure, carefully analyze 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.
There are bargains with potential to make money, and many people do very well buying foreclosures. However, there are also many REOs that are not good buys and may not be money makers.
Prepared to make an offer?
Most lenders have a department dedicated to REO that you'll work with while buying REO property from them. Typically the REO department will use a listing agent to get their REO properties listed on the local MLS.
Prior to making your offer, you'll want to contact either the listing agent or REO department at the bank and learn as much as you can about what they know about the condition of the property and what their process is for accepting offers. Since banks most commonly sell REO properties "as is", you may want 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 of your ability to secure financing may make your offer more attractive, such as a pre-approval letter from a lender.
Once you've presented your offer, it's customary for the bank to respond with a counter offer. At this point it will be your choice whether to accept their counter, or offer a counter to the counter offer.
Be aware, you'll be contending with a process that usually involves several people at the bank, and they don't work evenings or weekends. It's quite common for the process of offers and counter offers to take days or even weeks.