Just as with any home purchase, your smartest move is to hire a professional real estate agent like Bob & Bev Allwine.
What's an REO?
"REO" is Real Estate Owned. These are homes which have been through foreclosure and are presently possessed by the bank or mortgage company. This is different than 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 added during the foreclosure process. The buyer must also be able to pay with cash in hand. Finally, you'll receive the property entirely as is. That possibly may involve standing liens and even current occupants that may require eviction.
A bank-owned property, on the other hand, is a much cleaner and attractive deal. The REO property was unable to find a buyer during foreclosure auction. Now the bank owns it. The lender will take care of the elimination of tax liens, evict occupants if needed and generally plan for the issuance of a title insurance policy to the buyer at closing.
Take notice that REOs may be exempt from typical disclosure requirements. In California, for example, banks do not have to give a Transfer Disclosure Statement, a document that normally requires sellers to tell you about any defects of which they are aware. By hiring RE/MAX Classic, you can rest assured knowing all parties are fulfilling Michigan state disclosure requirements.
Is REO property in Novi a bargain?
It is occasionally presumed that any REO must be a steal and a chance for guaranteed profit. This isn't necessarily the case. 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 often eager to sell it quickly, they are also motivated to minimize any losses.
Look closely at the listing and sales prices of competing properties in the neighborhood when considering the purchase of 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 and selling foreclosures. But there are also many REOs that are not good buys and may not be money makers.
Time to make an offer?
Most banks 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 usually use a listing agent.
Prior to 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 about the condition of the property and what their process is for taking offers. Since banks typically sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for unknown damage and retract 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 is generally true for any real estate offer.)
After you've made your offer, it's customary for the bank to make a counter offer. At this point it will be up to you to decide 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 several people at the bank, and they don't work evenings or weekends. It's typical for the process of offers and counter offers to take days or even weeks.
All agents of RE/MAX Classic are licensed in the State of Michigan to do business in the State of Michigan per license law requirements setforth by the state requirements.
RE/MAX Classic - 26870 Beck Rd Novi, MI 48374 Bob & Bev Allwine - The Results Team Office: 248-348-3300 Direct: 248-348-1429 Cell: 248-921-8011 Fax: 248-348-6877 E-mails: BobAllwine@Remax.net/BevAllwine@Remax.net
Look closely at the listing and sales prices of competing properties in the neighborhood when considering the purchase of 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 and selling foreclosures. But there are also many REOs that are not good buys and may not be money makers.
