Buying REO property or a foreclosure in Elizabethtown?
Just as with any home purchase, your smartest move is to hire a professional real estate agent.
What is an REO?
"REO" or Real Estate Owned are properties which have been foreclosed upon that the bank or mortgage company presently 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. You must also be ready to pay with cash in hand. And on top of all that, you'll accept the property entirely as is. That may comprise of standing liens and even current occupants that need to be kicked out.
A bank-owned property, on the contrary, is a more tidy and attractive proposition. The REO property did not find a buyer during foreclosure auction. The lender now owns it. The lender will handle the elimination of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.
Note that REOs may be exempt from typical disclosure requirements. For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement, a document that typically requires sellers to make known any defects of which they are knowledgeable. By hiring Gold Star Realty, you can rest assured knowing all parties are fulfilling Kentucky state disclosure requirements.
Are REO properties a bargain in Elizabethtown?
It's occasionally thought that any foreclosure must be a good deal and a chance for easy money. This isn't necessarily the case. You have to be prudent about buying a REO if your intent is to profit from the sale. While it's true that the bank is usually eager to offload it soon, they are also motivated to get as much as they can for it.
When contemplating the value of a foreclosure, carefully analyze 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 buying foreclosures. However, there are also many REOs that are not good buys and may not be money makers.
All set to make an offer?
Most banks 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 learn as much as you can about what they know about the condition of the property and what their process is for getting offers. Since banks typically 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 terminate the offer if you find it. If, as a buyer, you can provide documentation demonstrating your ability to secure financing, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This goes for any real estate offer.)
After you've made your offer, you can expect the bank to counter offer. Then it will be your choice whether to accept their counter, or offer a counter to the counter offer. Your transaction could be final in one day, but that's usually not the case. 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. Gold Star Realty is used to working around the schedules of this type of seller and will do everything possible to ensure there are no unnecessary delays.