Making an offer on REO property or a foreclosure in the Triangle Area?
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Investing in a bank-owned property is not something to be taken lightly.
For more information, just contact us. We are glad to answer questions you have about real estate foreclosures.
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What's an REO?
"REO" is an abbreviation for Real Estate Owned. These are properties which have been through foreclosure that the bank or mortgage company now possesses. This is not the same as real estate up for foreclosure auction.
If you buy 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 prepared to pay with cash in hand. And on top of all that, you'll get the property 100% as is. That possibly could comprise of prevailing liens and even current denizens that need to be removed.
A bank-owned property, by contrast, is a much cleaner and attractive option. The REO property was unable to find a buyer during foreclosure auction. The bank now owns it. The bank will take care of the removal of tax liens, evict occupants if needed and generally organize for the issuance of a title insurance policy to the buyer at closing.
Take notice that REOs may be exempt from normal disclosure requirements.
For example, in North Carolina, it is optional for foreclosures to have a Property Disclosure Statement,
a document that normally requires sellers to reveal any defects of which they are informed.
By hiring Smart Partners Realty, you can rest assured knowing all parties are fulfilling North Carolina state disclosure requirements.
Are REO properties a bargain in Wake County?
It is sometimes believed that any REO must be a steal and an opportunity for guaranteed profit. This isn't always the case. You have to be very careful about buying a repossession if your intent is make money. Even though the bank is typically eager to offload it promptly, they are also motivated to minimize any losses.
When contemplating 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.
The bargains with money making potential exist, 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.
Ready to make an offer?
Most lenders have staff dedicated to REO that you'll work with in buying REO property from them. To get their properties advertised on the local MLS, the lender will frequently hire 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 concerning the condition of the property and what their process is for receiving offers. Since banks almost always 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.
If, as a buyer, you can provide documentation demonstrating 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 holds for any real estate offer.)
After you've submitted your offer, you can expect the bank to counter offer. Then it will be your choice whether to accept their counter, or submit another counter offer.
Your deal could be settled 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. Smart Partners Realty is prepared to work around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.