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Making an offer on REO property or a foreclosure in the Outer Banks area?
Savvy consumers will turn to a seasoned pro when considering the purchase of a foreclosed property. Should you have questions about real estate in the Outer Banks area, North Carolina, call me!
What's an REO?
"REO" or Real Estate Owned are houses which have been foreclosed upon and are now held by the bank or mortgage company. This differs from real estate up for foreclosure auction.
If you buy 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. The buyer must also be ready to pay with cash in hand. And on top of all that, you'll get the property 100% as is. That might comprise of current liens and even current denizens that need to be kicked out.
A bank-owned property, conversely, is a much neater and attractive deal. The REO property did not find a buyer during foreclosure auction. Now the bank owns it. The bank will handle 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 normal disclosure requirements. For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement, a document that normally requires sellers to tell you about any defects of which they are aware. By hiring Ken Baittinger, you can rest assured knowing all parties are fulfilling North Carolina state disclosure requirements.
Is REO property in the Outer Banks area a bargain?
It is commonly thought that any REO must be a steal and a possibility for guaranteed profit. This frequently isn't true. You have to be very careful about buying a repossession if your intent is to profit from the sale. While it's true that the bank is typically eager to offload it quickly, they are also motivated to get as much as they can for it.
Look closely 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 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. But, 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 staff dedicated to REO that you'll work with while buying REO property from them. Usually the REO department will use a listing agent to get their REO properties listed on the local MLS.
Before 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 what they know about the condition of the property and what their process is for receiving offers. Since banks almost always 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 hidden damage and withdraw 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 made your offer, you can expect the bank to make a counter offer. From there it will be your choice whether to accept their counter, or submit another counter offer. Your deal might be settled in one day, but that's rare. Since offers and counter offers usually give the other party a day or longer to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer. I am accustomed to these situations and will work to ensure there are no unnecessary delays.
Ken Baittinger: 3732 N. Croatan Hwy Kitty Hawk, NC 27949-9208
Phone: 252-305-5255 Fax: 252-255-1226 E-mail: email@example.com
Copyright © 2017 KEN BAITTINGER, REALTOR
All rate, payment, and area information are estimates and approximations only.