Making an offer on REO property or a foreclosure in Marine City?
Just as with any home purchase, your smartest move is to hire a professional real estate agent.
What's an REO?
"REO" is Real Estate Owned. These are houses which have completed the foreclosure process that the bank or mortgage company currently possesses. This is not the same as real estate 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 ready to pay with cash in hand. And on top of all that, you'll receive the property 100% as is. That possibly may comprise of existing liens and even current residents that need to be thrown out.
A bank-owned property, by contrast, is a much cleaner and attractive deal. The REO property did not find a buyer during foreclosure auction. Now the lender owns it. The bank will see to the removal of tax liens, evict occupants if needed and generally arrange for the issuance of a title insurance policy to the buyer at closing.
Note that REOs may be exempt from typical 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 J.A. Bachler, REALTOR®, you can rest assured knowing all parties are fulfilling Michigan state disclosure requirements.
Is REO property in Marine City a bargain?
It is sometimes thought that any REO must be a good deal and a possibility for guaranteed profit. This isn't necessarily true. You have to be cautious about buying a REO if your intent is to make money. Even though the bank is typically anxious to sell it soon, they are also looking to get as much as they can for it.
Look carefully at the listing and sales prices of comparable 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.
It is possible to find REOs with money-making potential, and many people do very well buying foreclosures. But, there are also many REOs that are not good buys and may lose money.
Ready to make an offer?
Most banks have a department dedicated to REO that you'll work with while buying REO property from them. Typically 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 accepting 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 hidden damage and withdraw the offer if you find it.
As with making any offer on real estate, providing documentation of your ability to pay may make your offer more attractive, such as a pre-approval letter from a lender.
Once you've made your offer, you can expect the bank to respond with a counter offer. Then it will be your decision whether to accept their counter, or offer a counter to the counter offer.
Realize, you'll be dealing with a process that usually involves multiple 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. J.A. Bachler, REALTOR® is used to working around the schedules of this type of seller and will do everything possible to ensure there are no unnecessary delays.