Purchasing REO property or a foreclosure in North Reading?
Just as with any property purchase, your wisest move is to hire a professional real estate agent. For more information, simply contact me through my site or e-mail me. I'm happy to answer any questions you have regarding real estate foreclosures.
What is an REO?
"REO" or Real Estate Owned are houses which have completed the foreclosure process that the bank or mortgage company currently owns. This is unlike 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 able to pay with cash in hand. And on top of all that, you'll accept the property completely as is. That might comprise of prevailing liens and even current residents that may require removal.
A bank-owned property, on the other hand, is a much cleaner and attractive deal. The REO property didn't find a buyer during foreclosure auction. Now the bank owns it. The lender 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 Nevada, it is optional for foreclosures to have a Property Disclosure Statement, a document that usually requires sellers to make known any defects they are knowledgeable of. By hiring Fitzgerald & Associates Real Estate, you can rest assured knowing all parties are fulfilling Massachusetts state disclosure requirements.
Are REO properties a bargain in Middlesex County?
It is commonly thought that any REO must be a good deal and a chance for guaranteed profit. This isn't necessarily the case. You have to be prudent about buying a REO if your intent is make a profit. Even though the bank is often eager to offload it quickly, they are also motivated to minimize any losses.
Look carefully at the listing and sales prices of comparable 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. There are bargains with potential to make money, and many people do very well buying foreclosures. But there are also many REOs that are not good buys and may not be money makers.
Time to make an offer?
Most lenders have a department dedicated to REO that you'll work with in buying REO property from them. To get their properties advertised on the local MLS, the lender will often hire a listing agent.
Prior to 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 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 unseen damage and cancel the offer if you find it. If, as a buyer, you can provide documentation demonstrating 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 make a counter offer. At this point it will be your choice whether to accept their counter, or submit another counter offer. Realize, you'll be working with a process that generally involves several people at the bank, and they don't work evenings or weekends. It's typical for there to be days or even weeks of going back and forth. Fitzgerald & Associates Real Estate is are used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.
* MOL = More or Less
Fitzgerald & Associates Real Estate 20 Main St North Reading, MA 01864-5007
Look carefully at the listing and sales prices of comparable 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. There are bargains with potential to make money, and many people do very well buying foreclosures. But there are also many REOs that are not good buys and may not be money makers.