Making an offer on REO property or a foreclosure in Winston-Salem?
Making an offer on a bank-owned property is not something to be taken casually.
For more information, you can contact me
through my site or e-mail me
. I'm glad to answer questions you have regarding real estate foreclosures.
What's an REO?
"REO" or Real Estate Owned are homes which have gone through foreclosure and are now held by the bank or mortgage company. This is not the same as 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 ready to pay with cash in hand. Finally, you'll accept the property totally as is. That possibly will involve prevailing liens and even current residents that need to be expelled.
A bank-owned property, by contrast, is a more tidy and attractive transaction. The REO property didn't find a buyer during foreclosure auction. Now the lender owns it. The lender will handle the removal of tax liens, evict occupants if needed and generally plan for the issuance of a title insurance policy to the buyer at closing.
You should be aware that REOs may be exempt from typical disclosure requirements.
For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement,
a document that usually requires sellers to make known any defects of which they are knowledgeable.
By hiring Mitchell Prime Properties, you can rest assured knowing all parties are fulfilling North Carolina state disclosure requirements.
Is REO property in Winston-Salem a bargain?
It's commonly presumed that any foreclosure must be a good buy and an opportunity for easy money. This often isn't true. You have to be very careful about buying a repossession if your intent is to make a profit. While it's true that the bank is usually anxious to sell it quickly, they are also looking to get as much as they can for it.
When considering 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.
There are bargains with potential to make money, and many people do very well flipping foreclosures. Still, there are also many REOs that are not good buys and may not be money makers.
All set to make an offer?
Most mortgage companies have a department dedicated to REO that you'll work with when buying REO property from them. To get their properties advertised on the local MLS, the lender will usually use 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 taking offers. Since banks usually 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 secure financing, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This goes for any real estate offer.)
After you've submitted your offer, it's customary for the bank to counter offer. From there it will be your choice whether to accept their counter, or offer a counter to the counter offer.
Be aware, you'll be contending 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. Mitchell Prime Properties is accustomed to these situations and will work to ensure there are no undue delays.