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Looking for REO property or a foreclosure in Wilmington?
Smart consumers will turn to a seasoned pro when considering the purchase of a foreclosed property.
What is an REO?
"REO" is short for Real Estate Owned. These are houses which have been foreclosed upon that the bank or mortgage company presently holds. This is not the same as 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 amassed during the foreclosure process. You must also be willing to pay with cash in hand. To top everything off, you'll accept the property completely as is. That may comprise of current liens and even current occupants that may require expulsion.
A bank-owned property, conversely, is a much neater and attractive option. The REO property did not find a buyer during foreclosure auction. The lender now owns it. The lender will deal with the elimination of tax liens, evict occupants if needed and generally arrange 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 California, banks are exempt from giving a Transfer Disclosure Statement, a document that normally requires sellers to reveal any defects of which they are informed. By hiring Alliance Reatly, you can rest assured knowing all parties are fulfilling Delaware state disclosure requirements.
Is REO property in Wilmington a bargain?
It is sometimes believed that any foreclosure must be a good buy and an opportunity for easy money. This isn't necessarily the case. You have to be cautious about buying a repossession if your intent is profit from the sale. Even though the bank is usually anxious to sell it promptly, they are also motivated to minimize any losses.
When considering 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. The bargains with money making potential exist, and many people do very well buying foreclosures. Still there are also many REOs that are not good buys and not likely to turn a profit.
All set to make an offer?
Most banks have a department 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.
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 taking offers. Since banks typically sell REO properties "as is", you may want 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, providing documentation proving your ability to secure financing may make your offer more attractive, such as a pre-approval letter from a lender.
Once you've submitted your offer, you can expect the bank to respond with a counter offer. Then it will be up to you to decide whether to accept their counter, or make another counter offer. Your deal could be final in a single day, but that's usually not the case. Since offers and counter offers usually allow a day or more for the other party to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer.