Making an offer on REO property or a foreclosure in Algonquin?
Savvy consumers will turn to a seasoned pro when considering a foreclosed property.
What is an REO?
"REO" is short for Real Estate Owned. These are homes which have been through foreclosure that the bank or mortgage company presently owns. This is unlike 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 prepared to pay with cash in hand. Finally, you'll receive the property completely as is. That may comprise of standing liens and even current tenants that need to be removed.
A bank-owned property, on the contrary, is a more tidy and attractive deal. The REO property did not find a buyer during foreclosure auction. The lender now owns it. The bank will take care of 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.
Note that REOs may be exempt from standard disclosure requirements.
In California, for example, banks do not have to give a Transfer Disclosure Statement,
a document that usually requires sellers to make known any defects they are knowledgeable of.
By hiring Five Star Realty And Management Company, Inc., you can rest assured knowing all parties are fulfilling Illinois state disclosure requirements.
Are REO properties a bargain in McHenry County?
It is frequently assumed that any foreclosure must be a steal and a possibility for guaranteed profit. This isn't necessarily true. You have to be very careful about buying a repossession if your intent is to make money off of it. Even though the bank is usually eager to sell it fast, they are also motivated to minimize any losses.
When pondering what to pay for a foreclosure, you need to look closely at 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. But there are also many REOs that are not good buys and may lose money.
Ready to make an offer?
Most mortgage companies have a department dedicated to REO that you'll work with while 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 discover as much as you can about what they know regarding the condition of the property and what their process is for taking offers. Since banks typically 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 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.
After you've submitted your offer, you can expect the bank to counter offer. Then it will be your decision whether to accept their counter, or offer a counter to the counter offer.
Your deal could be settled in a single 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.
* MOL = More or Less
Short Sales and Foreclosures Resource, Certified Residential Specialist, Accredited buyer Representitive, e-Pro Realor, REO trans Certified Platinum, Certified Foreclosure Specialist...
And More Coming To Countinue To Offer The Best Service In The Business!
Five Star Realty And Management Company, Inc. 1329 S Main St Algonquin, IL 60102
When pondering what to pay for a foreclosure, you need to look closely at 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. But there are also many REOs that are not good buys and may lose money.
