Buying REO property or a foreclosure in hagerstown?
Purchasing a bank-owned property is not something to be taken lightly.
What is an REO?
"REO" or Real Estate Owned are houses which have completed the foreclosure process and are presently held by the bank or mortgage company. 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. You must also be prepared to pay with cash in hand. To top everything off, you'll get the property totally as is. That possibly may involve standing liens and even current tenants that need to be evicted.
A bank-owned property, on the contrary, is a more tidy and attractive deal. The REO property did not find a buyer during foreclosure auction. The lender now owns it. The bank will deal with the removal 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. In California, for example, banks are not required to give a Transfer Disclosure Statement, a document that usually requires sellers to reveal any defects they are knowledgeable of. By hiring Mackintosh Inc. Realtors, you can rest assured knowing all parties are fulfilling Maryland state disclosure requirements.
Is REO property in Hagerstown a bargain?
It is frequently believed that any REO must be a bargain and a possibility for easy money. This isn't necessarily true. You have to be very careful about buying a REO if your intent is make money. Even though the bank is often anxious to sell it soon, they are also looking to get as much as they can for it.
When considering the value of a foreclosure, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale. The bargains with money making potential exist, 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.
Time to make an offer?
Most mortgage companies have a department dedicated to REO that you'll work with in buying REO property from them. Typically the REO department will use a listing agent to get their REO properties listed on the local MLS.
Before 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 their knowledge about the condition of the property and what their process is for getting offers. Since banks almost always 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 cancel the offer if you find it. As with making any offer on real estate, providing documentation showing your ability to secure financing may make your offer more attractive, such as a pre-approval letter from a lender.
Once 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 make another counter offer. Realize, you'll be working with a process that generally involves a group of people at the bank, and they don't work evenings or weekends. It's quite common for the process of offers and counter offers to take days or even weeks.