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Making an offer on REO property or a foreclosure in Plymouth?
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Savvy consumers will turn to a seasoned pro when considering the purchase of a foreclosed property.
For more information, you can contact me through my site or e-mail me. I'm happy to answer questions you have regarding real estate foreclosures.
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What's an REO?
"REO" or Real Estate Owned are homes which have been foreclosed upon and are now possessed by the bank or mortgage company. This is not the same as 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 accrued during the foreclosure process. You must also be willing to pay with cash in hand. Finally, you'll accept the property totally as is. That possibly could consist of standing liens and even current tenants that may require expulsion.
A bank-owned property, on the other hand, is a much cleaner and attractive deal. The REO property was unable to find a buyer during foreclosure auction. Now the lender owns it. The lender will deal with 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.
Do be aware that REOs may be exempt from normal disclosure requirements.
For example, in Nevada, 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 The Sylvester Team, you can rest assured knowing all parties are fulfilling Massachusetts state disclosure requirements.
Am I guaranteed a bargain when buying an REO property in Plymouth?
It's occasionally assumed that any foreclosure must be a steal and an opportunity for guaranteed profit. This simply isn't true. You have to be cautious about buying a repossession if your intent is profit from the sale. Even though the bank is usually anxious to sell it soon, they are also looking to get as much as they can for it.
Look closely at the listing and sales prices of competing homes in the neighborhood when considering the purchase of an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in.
It is possible to find REOs with money-making potential, and many people do very well buying and selling foreclosures. However there are also many REOs that are not good buys and may lose money.
Prepared to make an offer?
Most banks 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 typically contract with a listing agent.
Prior to making your offer, you'll want to contact either the listing agent or REO department at the bank and discover as much as you can about their knowledge concerning the condition of the property and what their process is for getting offers. Since banks typically sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for unknown damage and cancel the offer if you find it.
If, as a buyer, you can provide documentation showing your ability to pay, 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 make a counter offer. At this point it will be your decision whether to accept their counter, or submit another counter offer.
Realize, you'll be contending with a process that generally involves several people at the bank, and they don't work evenings or weekends. It's not uncommon for there to be days or even weeks of negotiating back and forth.
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