Buying REO property or a foreclosure in Monroe?
Smart consumers will turn to a seasoned pro when considering the purchase of a foreclosed property.
If you have any questions regarding real estate in Monroe, North Carolina, call me
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What is an REO?
"REO" or Real Estate Owned are homes which have been foreclosed upon that the bank or mortgage company presently holds. 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 added during the foreclosure process. The buyer must also be willing to pay with cash in hand. To top everything off, you'll accept the property totally as is. That may consist of current liens and even current residents that may require expulsion.
A bank-owned property, on the contrary, is a much neater and attractive deal. The REO property did not find a buyer during foreclosure auction. Now the bank 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 normal disclosure requirements.
For instance, in California, banks are exempt from giving a Transfer Disclosure Statement,
a document that usually requires sellers to reveal any defects they are informed of.
By hiring Appleseed Realty, you can rest assured knowing all parties are fulfilling North Carolina state disclosure requirements.
Is REO property in Monroe a bargain?
It's sometimes thought that any REO must be a bargain and a chance for easy money. This isn't necessarily true. You have to be very careful about buying a REO if your intent is to make a profit. Even though the bank is usually eager to sell it quickly, they are also looking to minimize any losses.
Look carefully at the listing and sales prices of competing properties in the neighborhood when considering the purchase of an REO. And factor in any repairs or upgrades necessary to prepare the house for resale or moving in.
The bargains with money making potential exist, and many people do very well buying foreclosures. But, there are also many REOs that are not good buys and may lose money.
Prepared to make an offer?
Most lenders have staff 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.
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 almost always 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 retract the offer if you find it.
If, as a buyer, you can provide documentation showing your ability to secure financing, 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.)
Once you've submitted your offer, you can expect the bank to respond with 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.
Your transaction could be settled in a single day, but that's usually not the case. Since offers and counter offers usually give the other party a day or longer to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer.