Purchasing REO property or a foreclosure in Burlington?
Just as with any property purchase, your wisest move is to hire a professional real estate agent.
What is an REO?
"REO" or Real Estate Owned are properties which have been foreclosed upon that the bank or mortgage company currently possesses. This is different than 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 amassed during the foreclosure process. The buyer must also be ready to pay with cash in hand. Finally, you'll accept the property completely as is. That possibly will involve existing liens and even current denizens that may require expulsion.
A bank-owned property, by contrast, is a much neater and attractive option. The REO property was unable to find a buyer during foreclosure auction. Now the bank owns it. The lender will deal with the elimination of tax liens, evict occupants if needed and generally plan 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 ordinarily requires sellers to reveal any defects of which they are aware.
By hiring David Massey Real Estate, you can rest assured knowing all parties are fulfilling North Carolina state disclosure requirements.
Are REO properties a bargain in Burlington?
It is commonly thought that any REO must be a steal and a possibility 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. While it's true that the bank is typically eager to offload it promptly, they are also motivated to minimize any losses.
When considering what to pay for 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.
It is possible to find REOs with money-making potential, and many people do very well buying foreclosures. But there are also many REOs that are not good buys and not likely to turn a profit.
Time to make an offer?
Most lenders have staff dedicated to REO that you'll work with in buying REO property from them. Usually 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 their knowledge about the condition of the property and what their process is for getting offers. Since banks usually sell REO properties "as is", you'll want to be sure and include an inspection contingency in your offer that gives you time to check for unknown damage and terminate the offer if you find it.
If, as a buyer, you can provide documentation proving 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 real estate offer.)
Once you've submitted your offer, it's customary for the bank to counter offer. At this point it will be your choice whether to accept their counter, or submit another counter offer.
Your transaction could be final in one day, but that's usually not the case. Since offers and counter offers usually allow a day or more for the other party to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer.