Making an offer on REO property or a foreclosure in Carolina Beach?
Smart consumers will turn to a seasoned pro when considering the purchase of a foreclosed property. For more information, you can contact us through our site or e-mail us. We're happy to answer questions you have about real estate foreclosures.
What is an REO?
"REO" is an abbreviation for Real Estate Owned. These are houses which have been foreclosed upon that the bank or mortgage company presently holds. This is different than 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 amassed during the foreclosure process. You must also be able to pay with cash in hand. To top everything off, you'll accept the property entirely as is. That may involve standing liens and even current occupants that need to be kicked out.
A bank-owned property, on the contrary, is a much cleaner and attractive transaction. The REO property didn't find a buyer during foreclosure auction. The lender now owns it. The bank will handle the elimination of tax liens, evict occupants if needed and generally organize for the issuance of a title insurance policy to the buyer at closing.
Do be aware that REOs may be exempt from normal disclosure requirements. For example, in our state, it is optional for foreclosures to have a Property Disclosure Statement, a document that ordinarily requires sellers to tell you about any defects of which they are aware. By hiring Giggey Real Estate, you can rest assured knowing all parties are fulfilling North Carolina state disclosure requirements.
Is REO property a bargain in the Wilmington/Carolina Beach/Kure Beach area?
It is sometimes believed that any foreclosure must be a good deal and a chance for guaranteed profit. This isn't necessarily true. You have to be prudent about buying a repossession if your intent is to make a profit. Even though the bank is typically eager to sell it quickly, 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. It is possible to find REOs with money-making potential, and many people do very well buying and selling foreclosures. Still, there are also many REOs that are not good buys and may not be money makers.
Ready to make an offer?
Most lenders have staff dedicated to REO that you'll work with when buying REO property from them. Normally 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 receiving offers. Since banks usually sell REO properties "as is", you may want to include an inspection contingency in your offer that gives you time to check for unseen damage and withdraw the offer if you find it. If, as a buyer, you can provide documentation proving your ability to pay, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This holds for any real estate offer.)
Once you've submitted your offer, it's customary for the bank to counter offer. From there it will be your decision whether to accept their counter, or submit another counter offer. Understand, you'll be working with a process that usually involves several people at the bank, and they don't work evenings or weekends. It's not unusual for the process of offers and counter offers to take days or even weeks. Giggey Real Estate is accustomed to these situations and will work to ensure there are no undue delays.