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Looking for REO property or a foreclosure in Ocean City?
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Smart consumers will turn to a seasoned pro when considering the purchase of a foreclosed property.
For more information, just contact me through my site or e-mail me. I'm happy to address any questions you have about real estate foreclosures.
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What is an REO?
"REO" or Real Estate Owned are properties which have completed the foreclosure process and are presently possessed 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 accrued during the foreclosure process. You must also be able to pay with cash in hand. Finally, you'll receive the property totally as is. That possibly could include existing liens and even current tenants that may require eviction.
A bank-owned property, on the contrary, is a more tidy and attractive transaction. The REO property didn't find a buyer during foreclosure auction. The lender now 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.
For example, in North Carolina, it is optional for foreclosures to have a Property Disclosure Statement,
a document that normally requires sellers to reveal any defects they are informed of.
By hiring Prudential Carruthers, you can rest assured knowing all parties are fulfilling Maryland state disclosure requirements.
Are REO properties a bargain in Worcester County?
It's frequently thought that any foreclosure must be a steal and an opportunity for guaranteed profit. This isn't always true. You have to be cautious about buying a REO if your intent is profit from the sale. While it's true that the bank is often eager to offload it promptly, they are also motivated to get as much as they can for it.
Look carefully at the listing and sales prices of similar properties in the neighborhood when making an offer on 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 flipping foreclosures. But there are also many REOs that are not good buys and may lose money.
Ready to make an offer?
Most mortgage companies have staff dedicated to REO that you'll work with when buying REO property from them. To get their properties advertised on the local MLS, the lender will usually contract with 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 regarding the condition of the property and what their process is for accepting offers. Since banks almost always sell REO properties "as is", it may be in your best interest 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.
If, as a buyer, you can provide documentation proving 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.)
Once you've made your offer, you can expect the bank to respond with a counter offer. At this point it will be up to you to decide whether to accept their counter, or make another counter offer.
Your transaction might be settled in one 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. Prudential Carruthers is accustomed to these situations and will work to ensure there are no unnecessary delays.
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