Buying REO property or a foreclosure in Des Plaines?
Savvy consumers will turn to a seasoned pro when considering a foreclosed property.
For more information, simply contact me through my site or e-mail me. I'm happy to answer questions you have about real estate foreclosures.
What's an REO?
"REO" or Real Estate Owned are houses which have been foreclosed upon and are currently held by the bank or mortgage company. This is not the same as a property 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 amassed during the foreclosure process. You must also be willing to pay with cash in hand. Finally, you'll receive the property completely as is. That possibly will comprise of current liens and even current tenants that need to be expelled.
A bank-owned property, conversely, is a more tidy and attractive option. The REO property didn't find a buyer during foreclosure auction. The lender now owns it. The lender will attend 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.
Do be aware that REOs may be exempt from normal disclosure requirements.
For instance, in California, banks are exempt from giving a Transfer Disclosure Statement,
a document that normally requires sellers to tell you about any defects they are aware of.
By hiring Patti McDonald - Fresh Horizon Realty, you can rest assured knowing all parties are fulfilling Illinois state disclosure requirements.
Am I guaranteed a good deal when investing in an REO property in Des Plaines?
It is sometimes assumed that any foreclosure must be a bargain and a possibility for easy money. This often isn't true. You have to be cautious about buying a repossession 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 minimize any losses.
Look closely 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.
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 may lose money.
Ready to make an offer?
Most banks have staff dedicated to REO that you'll work with while buying REO property from them. Commonly 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 what they know about the condition of the property and what their process is for receiving offers. Since banks usually sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for unseen damage and cancel the offer if you find it.
As with making any offer on real estate, you'll make your offer more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
After you've presented your offer, you can expect the bank to 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 settled in one day, but that's rare. 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. Patti McDonald - Fresh Horizon 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.