Making an offer on REO property or a foreclosure in Milford?
Smart consumers will turn to a seasoned pro when considering the purchase of a foreclosed property.
What is an REO?
"REO" or Real Estate Owned are houses which have been foreclosed upon and are currently owned by the bank or mortgage company. This is unlike a property 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 willing to pay with cash in hand. And on top of all that, you'll get the property completely as is. That possibly may include current liens and even current occupants that need to be thrown out.
A bank-owned property, on the other hand, is a much cleaner and attractive deal. The REO property did not find a buyer during foreclosure auction. The bank now owns it. The bank will deal with 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.
Do be aware that REOs may be exempt from typical disclosure requirements.
For example, in Nevada, it is optional for foreclosures to have a Property Disclosure Statement,
a document that ordinarily requires sellers to reveal any defects of which they are informed.
By hiring RE/MAX Classic, you can rest assured knowing all parties are fulfilling Michigan state disclosure requirements.
Is REO property in Milford a bargain?
It is occasionally thought that any foreclosure must be a good deal and a chance for easy money. This isn't always the case. You have to be prudent about buying a REO if your intent is make a profit. While it's true that the bank is typically anxious to offload it soon, they are also looking to get as much as they can for it.
Look carefully at the listing and sales prices of similar properties 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 lose money.
Prepared to make an offer?
Most lenders 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 frequently 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 what they know 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 unknown damage and terminate the offer if you find it.
If, as a buyer, you can provide documentation showing your ability to pay, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This holds for any real estate offer.)
After you've submitted your offer, you can expect 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 contending with a process that generally involves several people at the bank, and they don't work evenings or weekends. It's not unusual for the process of offers and counter offers to take days or even weeks. RE/MAX Classic is are used to working around the schedules of this type of seller and will do everything possible to ensure there are no unnecessary delays.
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 1042 N. Milford Road Suite 201 Milford, MI 48381
Look carefully at the listing and sales prices of similar properties 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 lose money.
