Purchasing REO property or a foreclosure in Astoria?
Smart consumers will turn to a seasoned pro when considering the purchase of a foreclosed property.
What's an REO?
"REO" stands for Real Estate Owned. These are houses which have been foreclosed upon that the bank or mortgage company now holds. This differs from 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 able to pay with cash in hand. And on top of all that, you'll receive the property completely as is. That possibly may comprise of standing liens and even current residents that may require eviction.
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. Now the bank owns it. The lender will attend to the removal of tax liens, evict occupants if needed and generally organize for the issuance of a title insurance policy to the buyer at closing.
You should be aware that REOs may be exempt from typical disclosure requirements.
For instance, in California, banks are exempt from giving a Transfer Disclosure Statement,
a document that normally requires sellers to reveal any defects of which they are informed.
By hiring Halvatzis Realty Inc, you can rest assured knowing all parties are fulfilling New York state disclosure requirements.
Are REO properties a bargain in Astoria?
It is commonly presumed that any REO must be a good deal and a chance for easy money. This isn't always true. You have to be very careful about buying a REO if your intent is to make money off of it. While it's true that the bank is often eager to sell it soon, they are also looking to minimize any losses.
Look carefully at the listing and sales prices of similar homes 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.
It is possible to find REOs with money-making potential, and many people do very well flipping 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 in buying REO property from them. To get their properties advertised on the local MLS, the lender will often use a listing agent.
Before 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 their knowledge regarding the condition of the property and what their process is for accepting offers. Since banks almost always 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.
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, it's customary for the bank to counter offer. From there it will be your decision whether to accept their counter, or offer a counter to the counter offer.
Realize, you'll be working with a process that probably involves several people at the bank, and they don't work evenings or weekends. It's quite common for the process of offers and counter offers to take days or even weeks.