Buying REO property or a foreclosure in Raleigh?
Investing in a bank-owned property is not something to be taken casually.
For more information, just contact me
through my site or e-mail me
. I'm happy to answer any questions you have about real estate foreclosures.
What is an REO?
"REO" or Real Estate Owned are houses which have been foreclosed upon that the bank or mortgage company presently possesses. 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 accumulated during the foreclosure process. The buyer must also be willing to pay with cash in hand. Finally, you'll get the property entirely as is. That possibly could involve current liens and even current tenants that may require expulsion.
A bank-owned property, conversely, is a much cleaner and attractive option. The REO property didn't find a buyer during foreclosure auction. Now the lender owns it. The lender will take care of the removal 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 normal disclosure requirements.
For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement,
a document that typically requires sellers to reveal any defects of which they are aware.
By hiring Bobby Hill, you can rest assured knowing all parties are fulfilling North Carolina state disclosure requirements.
Are REO properties a bargain in Raleigh?
It is sometimes assumed that any foreclosure must be a bargain 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 usually eager to offload it soon, they are also looking to get as much as they can for it.
Look carefully at the listing and sales prices of competing properties in the neighborhood when making an offer on an REO. And factor in any repairs or upgrades necessary to prepare the house for resale or moving in.
There are bargains with potential to make money, and many people do very well flipping foreclosures. However, there are also many REOs that are not good buys and not likely to turn a profit.
Ready to make an offer?
Most banks have staff dedicated to REO that you'll work with when buying REO property from them. Typically 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 find out as much as you can about their knowledge concerning the condition of the property and what their process is for getting offers. Since banks most commonly 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 withdraw the offer if you find it.
As with making any offer on real estate, you'll make your offer 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, it's customary for the bank to make a counter offer. From there it will be your choice whether to accept their counter, or make another counter offer.
Your transaction could be final 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.