Buying REO property or a foreclosure in Lake Norman?
Investing in a bank-owned property is not something to be taken casually. If you have questions regarding real estate in Lake Norman, North Carolina, call me
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What's an REO?
"REO" or Real Estate Owned are houses which have gone through foreclosure that the bank or mortgage company now owns. This is not the same as 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 amassed during the foreclosure process. The buyer must also be willing to pay with cash in hand. Finally, you'll accept the property totally as is. That possibly will involve existing liens and even current denizens that need to be expelled.
A bank-owned property, on the other hand, is a much neater and attractive option. The REO property didn't find a buyer during foreclosure auction. The lender now 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.
You should be aware that REOs may be exempt from normal disclosure requirements. For example, in North Carolina, 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 informed. By hiring Southern Homes of the Carolinas, you can rest assured knowing all parties are fulfilling North Carolina state disclosure requirements.
Are REO properties a bargain in the Lake Norman Area?
It's occasionally believed that any REO must be a good buy and a chance for easy money. This often isn't true. You have to be very careful about buying a REO if your intent is to make a profit. While it's true that the bank is often anxious to offload it fast, they are also looking to minimize any losses.
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. The bargains with money making potential exist, and many people do very well buying foreclosures. But, 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. 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 learn as much as you can about their knowledge regarding the condition of the property and what their process is for getting 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 unseen damage and terminate the offer if you find it. If, as a buyer, you can provide documentation proving 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 made your offer, it's customary for the bank to 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 a single day, but that's rare. 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. Southern Homes of the Carolinas is used to working around the schedules of this type of seller and will do everything possible to ensure there are no unnecessary delays.