Purchasing REO property or a foreclosure in North Huntingdon?
Investing in a bank-owned property is not something to be taken lightly.
What's an REO?
"REO" stands for Real Estate Owned. These are properties which have completed the foreclosure process that the bank or mortgage company now owns. This is unlike 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 amassed during the foreclosure process. The buyer must also be able to pay with cash in hand. Finally, you'll receive the property totally as is. That possibly may comprise of prevailing liens and even current tenants that may require expulsion.
A bank-owned property, conversely, is a much neater and attractive proposition. The REO property was unable to 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 prepare for the issuance of a title insurance policy to the buyer at closing.
You should be aware that REOs may be exempt from normal disclosure requirements.
In California, for example, banks do not have to give a Transfer Disclosure Statement,
a document that normally requires sellers to reveal any defects of which they are aware.
By hiring Francis Fisher, you can rest assured knowing all parties are fulfilling Pennsylvania state disclosure requirements.
Am I guaranteed a bargain when purchasing a bank owned property in North Huntingdon?
It's sometimes thought that any REO must be a good deal and a possibility for guaranteed profit. This simply isn't true. You have to be prudent about buying a REO if your intent is to make money. While it's true that the bank is often anxious to sell it soon, they are also motivated to get as much as they can for it.
When contemplating what to pay for 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.
There are bargains with potential to make money, and many people do very well flipping foreclosures. However, 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 staff dedicated to REO that you'll work with when buying REO property from them. To get their properties advertised on the local MLS, the lender will often contract with 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 receiving offers. Since banks most commonly sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for hidden damage and terminate the offer if you find it.
As with making any offer on real estate, your offer may be more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
After you've made your offer, it's customary for the bank to counter offer. Then it will be your choice whether to accept their counter, or make another counter offer.
Your transaction might be final in one day, but that's rare. Since offers and counter offers usually give the other party a day or longer to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer.