Making an offer on REO property or a foreclosure in Wilmington?
Just as with any property purchase, your wisest move is to hire a professional real estate agent.
For more information, just contact us
through our site or e-mail us
. We're glad to address any questions you have about real estate foreclosures.
What's an REO?
"REO" is an abbreviation for Real Estate Owned. These are homes which have gone through foreclosure and are presently possessed 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 accumulated during the foreclosure process. The buyer must also be able to pay with cash in hand. To top everything off, you'll get the property 100% as is. That possibly may consist of existing liens and even current residents that need to be evicted.
A bank-owned property, on the other hand, is a much neater and attractive deal. The REO property was unable to find a buyer during foreclosure auction. Now the lender owns it. The bank will see to the elimination of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.
Note that REOs may be exempt from typical disclosure requirements.
In California, for example, banks are not required to give a Transfer Disclosure Statement,
a document that typically requires sellers to make known any defects of which they are informed.
By hiring The BARBARA PUGH Real Estate Team, you can rest assured knowing all parties are fulfilling North Carolina state disclosure requirements.
Are REO properties a bargain in New Hanover County?
It's occasionally assumed that any foreclosure must be a bargain and an opportunity for easy money. This frequently isn't true. You have to be very careful about buying a repossession if your intent is to profit from the sale. Even though the bank is typically anxious to offload it fast, they are also looking to get as much as they can for it.
When pondering 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 buying foreclosures. However, there are also many REOs that are not good buys and may not be money makers.
Time to make an offer?
Most banks have staff dedicated to REO that you'll work with in buying REO property from them. Usually 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 their knowledge about the condition of the property and what their process is for accepting 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 unknown damage and withdraw 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 holds for any real estate offer.)
After you've presented your offer, it's customary for the bank to make a counter offer. Then it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer.
Understand, you'll be working with a process that generally involves a group of people at the bank, and they don't work evenings or weekends. It's quite common for the process of offers and counter offers to take days or even weeks. The BARBARA PUGH Real Estate Team is used to working around the schedules of this type of seller and will do everything possible to ensure there are no unnecessary delays.