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Making an offer on REO property or a foreclosure in Sterling Heights?
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Foreclosed upon and bank owned property purchases require the assistance of an experience professional.
Should you have questions about real estate in Sterling Heights, Michigan, call me or send me an e-mail.
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What's an REO?
"REO" or Real Estate Owned are properties which have completed the foreclosure process and are currently owned by the bank or mortgage company. This is unlike a property 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 willing to pay with cash in hand. To top everything off, you'll get the property totally as is. That possibly could comprise of current liens and even current denizens that need to be evicted.
A bank-owned property, on the other hand, is a more tidy and attractive proposition. The REO property did not find a buyer during foreclosure auction. The lender now owns it. The lender will deal with 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 North Carolina, it is optional for foreclosures to have a Property Disclosure Statement,
a document that normally requires sellers to tell you about any defects they are knowledgeable of.
By hiring Positve Directions Realty, you can rest assured knowing all parties are fulfilling Michigan state disclosure requirements.
Am I assured a good deal when purchasing a bank owned property in Sterling Heights?
It is occasionally believed that any REO must be a steal and a chance for guaranteed profit. This often isn't true. You have to be cautious about buying a REO if your intent is to make money off of it. While it's true that the bank is usually eager to offload it quickly, they are also motivated to minimize any losses.
Look closely at the listing and sales prices of comparable 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.
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.
Prepared to make an offer?
Most mortgage companies have a department dedicated to REO that you'll work with while buying REO property from them. Usually the REO department will use a listing agent to get their REO properties listed on the local MLS.
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 receiving offers. Since banks most commonly 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 cancel the offer if you find it.
As with making any offer on real estate, providing documentation of your ability to secure financing may make your offer more attractive, such as a pre-approval letter from a lender.
After you've presented your offer, you can expect the bank to counter offer. Then it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer.
Your transaction could be final in one day, but that's usually not the case. 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. Positve Directions Realty is accustomed to these situations and will work to ensure there are no undue delays.
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