Foreclosed upon and bank owned property purchases require the assistance of an experience professional.
Should you have questions regarding real estate in Mitchell, Indiana, call me or send me an e-mail.
What's an REO?
"REO" is Real Estate Owned. These are homes which have been through foreclosure that the bank or mortgage company presently possesses. 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 added during the foreclosure process. The buyer must also be able to pay with cash in hand. To top everything off, you'll get the property completely as is. That possibly will comprise of prevailing liens and even current denizens that need to be evicted.
A bank-owned property, on the other hand, is a much cleaner and attractive transaction. The REO property didn't find a buyer during foreclosure auction. The bank now owns it. The bank will see to the elimination of tax liens, evict occupants if needed and generally arrange 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 North Carolina, it is optional for foreclosures to have a Property Disclosure Statement,
a document that typically requires sellers to tell you about any defects of which they are knowledgeable.
By hiring Dogwood Realty Inc, you can rest assured knowing all parties are fulfilling Indiana state disclosure requirements.
Are REO properties a bargain in Mitchell?
It's commonly believed that any REO must be a bargain and a possibility for easy money. This isn't always true. You have to be cautious about buying a REO if your intent is to make money off of it. Even though the bank is typically eager to sell it promptly, they are also looking to minimize any losses.
Look carefully at the listing and sales prices of similar homes in the neighborhood when making an offer on an REO. And factor in any repairs or upgrades 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. However there are also many REOs that are not good buys and may not be money makers.
Ready to make an offer?
Most banks have staff dedicated to REO that you'll work with while buying REO property from them. To get their properties advertised on the local MLS, the lender will typically 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 learn as much as you can about what they know concerning the condition of the property and what their process is for accepting offers. Since banks almost always sell REO properties "as is", you may want to include an inspection contingency in your offer that gives you time to check for hidden damage and retract 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 made your offer, it's customary for the bank to counter offer. At this point it will be your decision whether to accept their counter, or offer a counter to the counter offer.
Your transaction might be final in one 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.
Look carefully at the listing and sales prices of similar homes in the neighborhood when making an offer on an REO. And factor in any repairs or upgrades 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. However there are also many REOs that are not good buys and may not be money makers.
