Purchasing REO property or a foreclosure in South Jersey?
Savvy consumers will turn to a seasoned pro when considering the purchase of a foreclosed property.
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What is an REO?
"REO" means Real Estate Owned. These are homes which have completed the foreclosure process and are now held by the bank or mortgage company. This differs from 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 added during the foreclosure process. The buyer must also be able to pay with cash in hand. Finally, you'll get the property entirely as is. That possibly could consist of existing liens and even current denizens that may require removal.
A bank-owned property, conversely, is a much cleaner and attractive option. The REO property did not find a buyer during foreclosure auction. Now the bank owns it. The lender will see to 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 standard disclosure requirements.
For instance, in California, banks do not have to give a Transfer Disclosure Statement,
a document that usually requires sellers to disclose any defects they are aware of.
By hiring Rixon Realty, you can rest assured knowing all parties are fulfilling New Jersey state disclosure requirements.
Are REO properties a bargain in South Jersey?
It's occasionally believed that any REO must be a good deal and an opportunity for easy money. This simply isn't true. You have to be prudent about buying a repossession if your intent is to make a profit. Even though the bank is typically eager to offload it fast, they are also looking to get as much as they can for it.
When contemplating the value of 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.
There are bargains with potential to make money, and many people do very well buying foreclosures. But, there are also many REOs that are not good buys and may not be money makers.
Ready to make an offer?
Most banks have staff 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 often use a listing agent.
Before 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 their knowledge about the condition of the property and what their process is for taking offers. Since banks usually sell REO properties "as is", you may want to include an inspection contingency in your offer that gives you time to check for hidden damage and terminate the offer if you find it.
As with making any offer on real estate, your offer may be more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
Once you've presented your offer, you can expect the bank to respond with a counter offer. From there it will be your choice whether to accept their counter, or make another counter offer.
Realize, you'll be working with a process that probably involves a group of people at the bank, and they don't work evenings or weekends. It's typical for the process of offers and counter offers to take days or even weeks.