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Purchasing REO property or a foreclosure in Durham?
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Foreclosed upon and bank owned property purchases require the assistance of an experience professional.
If you have questions about real estate in Durham, North Carolina, call me or send me an e-mail.
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What is an REO?
"REO" stands for Real Estate Owned. These are properties which have been foreclosed upon and are presently owned by the bank or mortgage company. This is unlike 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. You must also be able to pay with cash in hand. To top everything off, you'll get the property completely as is. That possibly may involve current liens and even current denizens that may require expulsion.
A bank-owned property, on the other hand, is a much cleaner and attractive option. The REO property didn't find a buyer during foreclosure auction. Now the lender 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.
Take notice that REOs may be exempt from normal disclosure requirements.
For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement,
a document that ordinarily requires sellers to reveal any defects they are informed of.
By hiring Tiffany Elder - Broker, Realtor, you can rest assured knowing all parties are fulfilling North Carolina state disclosure requirements.
Are REO properties a bargain in Durham?
It's sometimes presumed that any foreclosure must be a bargain and an opportunity for easy money. This isn't always the case. You have to be very careful about buying a repossession 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 get as much as they can for it.
Look closely at the listing and sales prices of similar properties in the neighborhood when considering the purchase of an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in.
There are bargains with potential to make money, and many people do very well flipping foreclosures. Still there are also many REOs that are not good buys and not likely to turn a profit.
Ready to make an offer?
Most lenders have a department dedicated to REO that you'll work with when buying REO property from them. Commonly 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 find out as much as you can about their knowledge concerning the condition of the property and what their process is for getting offers. Since banks almost always sell REO properties "as is", you'll want to be sure and include an inspection contingency in your offer that gives you time to check for unknown damage and retract 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.
Once you've made your offer, it's customary for the bank to respond with a counter offer. Then it will be your choice whether to accept their counter, or offer a counter to the counter offer.
Your deal 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.
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Tiffany Elder, MBA, Broker, Realtor
Paradigm Properties
5317 Highgate Drive., Suite #211
Durham NC 27713
Office: (919) 260-2507 Fax: (866) 854-4717
Email: tiffany@tiffanyelder.com
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