Making an offer on REO property or a foreclosure in Southampton?
Purchasing a bank-owned property is not something to be taken lightly.
For more information, you can contact me through my site or e-mail me. I'm happy to address any questions you have about real estate foreclosures.
What is an REO?
"REO" is short for Real Estate Owned. These are properties which have gone through foreclosure that the bank or mortgage company currently possesses. This is different than 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 accumulated 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 100% as is. That may comprise of standing liens and even current tenants that may require eviction.
A bank-owned property, by contrast, is a more tidy and attractive option. The REO property didn't find a buyer during foreclosure auction. The bank now owns it. The lender will see to the removal of tax liens, evict occupants if needed and generally arrange 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 ordinarily requires sellers to reveal any defects of which they are informed.
By hiring Prudential Douglas Elliman, you can rest assured knowing all parties are fulfilling New York state disclosure requirements.
Are REO properties a bargain in Suffolk County?
It is occasionally presumed that any REO must be a good buy and an opportunity for guaranteed profit. This frequently isn't true. You have to be prudent about buying a repossession if your intent is profit from the sale. While it's true that the bank is often anxious to offload it quickly, they are also looking to minimize any losses.
When pondering what to pay for REO property, you need to look closely at 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. Still there are also many REOs that are not good buys and not likely to turn a profit.
All set to make an offer?
Most banks have a department dedicated to REO that you'll work with while buying REO property from them. To get their properties advertised on the local MLS, the lender will usually hire a listing agent.
Prior to 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 accepting offers. Since banks most commonly 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 unseen damage and withdraw the offer if you find it.
As with making any offer on real estate, providing documentation of your ability to secure financing may make your offer more attractive, such as a pre-approval letter from a lender.
Once you've submitted your offer, it's customary for the bank to respond with a counter offer. From there it will be up to you to decide whether to accept their counter, or submit another counter offer.
Your deal might be final in a single day, but that's rare. 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. Prudential Douglas Elliman is accustomed to these situations and will work to ensure there are no unnecessary delays.
When pondering what to pay for REO property, you need to look closely at 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. Still there are also many REOs that are not good buys and not likely to turn a profit.