Buying REO property or a foreclosure in Somerset?
|Just as with any home purchase, your wisest move is to hire a professional real estate agent.|
What's an REO?"REO" stands for Real Estate Owned. These are properties which have been foreclosed upon that the bank or mortgage company presently possesses. 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 amassed during the foreclosure process. The buyer must also be ready to pay with cash in hand. To top everything off, you'll accept the property completely as is. That might include prevailing liens and even current denizens that need to be evicted.
A bank-owned property, conversely, is a much neater and attractive deal. The REO property didn't find a buyer during foreclosure auction. Now the bank owns it. The lender will see to the elimination of tax liens, evict occupants if needed and generally organize for the issuance of a title insurance policy to the buyer at closing.
Note that REOs may be exempt from normal disclosure requirements. For instance, in California, banks are not required to give a Transfer Disclosure Statement, a document that typically requires sellers to make known any defects they are aware of. By hiring CAROL BRANNAKA REALTORS, you can rest assured knowing all parties are fulfilling Massachusetts state disclosure requirements.
Are REO properties a bargain in Bristol County?It's occasionally believed that any foreclosure must be a steal and a possibility for easy money. This isn't necessarily the case. You have to be prudent about buying a repossession if your intent is to make money off of it. While it's true that the bank is typically eager to offload it promptly, they are also looking 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. It is possible to find REOs with money-making potential, and many people do very well flipping foreclosures. Still there are also many REOs that are not good buys and may not be money makers.
Prepared to make an offer?Most mortgage companies have staff dedicated to REO that you'll work with in 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 concerning the condition of the property and what their process is for receiving offers. Since banks typically sell REO properties "as is", it may be in your best interest to include an inspection contingency in your offer that gives you time to check for hidden damage and withdraw the offer if you find it. As with making any offer on real estate, providing documentation proving your ability to pay may make your offer more attractive, such as a pre-approval letter from a lender.
Once you've made 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 submit another counter offer. Realize, you'll be working 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.