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Making an offer on REO property or a foreclosure in Raleigh?
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Just as with any property purchase, your smartest move is to hire a professional real estate agent.
If you have any questions about real estate in Raleigh, North Carolina, call me or send me an e-mail.
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What's an REO?
"REO" is an abbreviation for Real Estate Owned. These are houses which have been foreclosed upon that the bank or mortgage company currently 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 added during the foreclosure process. The buyer must also be prepared to pay with cash in hand. And on top of all that, you'll accept the property totally as is. That possibly could involve prevailing liens and even current tenants that need to be removed.
A bank-owned property, by contrast, is a much neater and attractive deal. The REO property didn't find a buyer during foreclosure auction. The lender now owns it. The lender 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.
Note that REOs may be exempt from standard disclosure requirements.
For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement,
a document that normally requires sellers to make known any defects of which they are aware.
By hiring Only Way Realty, you can rest assured knowing all parties are fulfilling North Carolina state disclosure requirements.
Is REO property in Raleigh a bargain?
It is occasionally thought that any foreclosure must be a bargain and a chance for easy money. This often isn't true. You have to be prudent about buying a repossession if your intent is profit from the sale. While it's true that the bank is typically eager to offload it quickly, they are also motivated to get as much as they can for it.
Look closely at the listing and sales prices of similar properties 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.
There are bargains with potential to make money, and many people do very well buying and selling foreclosures. Still there are also many REOs that are not good buys and may lose money.
All set 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 find out as much as you can about their knowledge about the condition of the property and what their process is for taking offers. Since banks typically 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 cancel the offer if you find it.
As with making any offer on real estate, providing documentation of your ability to pay may make your offer more attractive, such as a pre-approval letter from a lender.
After you've presented your offer, it's customary for the bank to respond with a counter offer. From there it will be your decision whether to accept their counter, or offer a counter to the counter offer.
Be aware, you'll be contending with a process that probably involves multiple people at the bank, and they don't work evenings or weekends. It's not uncommon for there to be days or even weeks of going back and forth.
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Today's Rates:
| 30-yr Fixed | 3.87% | 4% | | 15-yr Fixed | 3.16% | 3.33% | | 1-yr Adj | 2.84% | 3.52% |
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