Purchasing a bank-owned property is not something to be taken casually.
What's an REO?
"REO" or Real Estate Owned are homes which have gone through foreclosure that the bank or mortgage company now holds. This is different than a property 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 accumulated during the foreclosure process. The buyer must also be willing to pay with cash in hand. To top everything off, you'll receive the property totally as is. That possibly could include prevailing liens and even current residents that need to be put out.
A bank-owned property, on the contrary, is a much cleaner and attractive deal. The REO property did not find a buyer during foreclosure auction. The bank now owns it. The bank will see to 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 Nevada, 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 aware. By hiring Woodward Realty Group, you can rest assured knowing all parties are fulfilling New Jersey state disclosure requirements.
Are REO properties a bargain in Freehold?
It's frequently presumed that any foreclosure must be a bargain and an opportunity for guaranteed profit. This isn't always the case. You have to be prudent about buying a REO if your intent is profit from the sale. While it's true that the bank is typically eager to sell it quickly, they are also looking to minimize any losses.
Look carefully at the listing and sales prices of comparable properties in the neighborhood when considering the purchase of an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in. The bargains with money making potential exist, and many people do very well buying foreclosures. Still there are also many REOs that are not good buys and may lose money.
All set to make an offer?
Most mortgage companies have a department dedicated to REO that you'll work with while buying REO property from them. Normally 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 discover as much as you can about what they know about the condition of the property and what their process is for taking offers. Since banks usually sell REO properties "as is", you'll want to be sure and include an inspection contingency in your offer that gives you time to check for unknown damage and terminate 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 is generally true for any type of real estate offer.)
Once you've submitted your offer, it's customary for the bank to make a counter offer. At this point it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer. Your deal might be final 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.
Woodward Realty Group 55 W.Main St. Freehold, NJ 07728
Look carefully at the listing and sales prices of comparable properties in the neighborhood when considering the purchase of an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in. The bargains with money making potential exist, and many people do very well buying foreclosures. Still there are also many REOs that are not good buys and may lose money.
