Making an offer on a bank-owned property is not something to be taken lightly.
For more information, just contact me through my site or e-mail me. I'm glad to answer questions you have regarding real estate foreclosures.
What is an REO?
"REO" or Real Estate Owned are properties which have completed the foreclosure process that the bank or mortgage company presently holds. This is not the same as a property 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 added during the foreclosure process. The buyer must also be willing to pay with cash in hand. Finally, you'll get the property 100% as is. That may consist of standing liens and even current denizens that may require expulsion.
A bank-owned property, on the other hand, is a much neater and attractive option. The REO property didn't find a buyer during foreclosure auction. Now the lender owns it. The bank will handle 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.
Do be aware 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 they are informed of.
By hiring Realtor, you can rest assured knowing all parties are fulfilling New Hampshire state disclosure requirements.
Am I assured a bargain when investing in an REO property in Amherst?
It's sometimes thought that any foreclosure must be a steal and an opportunity for guaranteed profit. This isn't always true. You have to be prudent about buying a REO if your intent is make money. While it's true that the bank is usually anxious to offload it soon, they are also looking to get as much as they can for it.
Look carefully at the listing and sales prices of similar homes in the neighborhood when making an offer on an REO. And factor in any repairs or upgrades 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. But there are also many REOs that are not good buys and may not be money makers.
Time to make an offer?
Most mortgage companies 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 often use a listing agent.
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 about the condition of the property and what their process is for receiving 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 unknown damage and terminate the offer if you find it.
As with making any offer on real estate, your offer may be more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
Once you've submitted your offer, you can expect the bank to make a counter offer. Then it will be your choice whether to accept their counter, or make another counter offer.
Be aware, 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 uncommon for the process of offers and counter offers to take days or even weeks. Realtor is accustomed to these situations and will work to ensure there are no undue delays.
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Look carefully at the listing and sales prices of similar homes in the neighborhood when making an offer on an REO. And factor in any repairs or upgrades 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. But there are also many REOs that are not good buys and may not be money makers.