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Purchasing REO property or a foreclosure in Katonah?
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Investing in a bank-owned property is not something to be taken casually.
Should you have questions regarding real estate in Katonah, New York, call me or send me an e-mail.
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What's an REO?
"REO" or Real Estate Owned are homes which have been foreclosed upon and are now possessed by the bank or mortgage company. 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 accumulated during the foreclosure process. You must also be ready to pay with cash in hand. To top everything off, you'll get the property completely as is. That might comprise of prevailing liens and even current residents that need to be thrown out.
A bank-owned property, by contrast, is a much cleaner and attractive deal. The REO property did not find a buyer during foreclosure auction. Now the lender owns it. The lender will attend to the elimination of tax liens, evict occupants if needed and generally plan for the issuance of a title insurance policy to the buyer at closing.
Take notice that REOs may be exempt from standard disclosure requirements.
For example, in Nevada, it is optional for foreclosures to have a Property Disclosure Statement,
a document that typically requires sellers to reveal any defects they are aware of.
By hiring Nelson Salazar - Realtor, you can rest assured knowing all parties are fulfilling New York state disclosure requirements.
Are REO properties a bargain in Westchester County?
It is frequently assumed that any REO must be a good buy and a possibility for easy money. This isn't necessarily the case. You have to be cautious about buying a REO if your intent is make a profit. Even though the bank is usually eager to offload it soon, they are also looking to minimize any losses.
When pondering the value of a foreclosure, you need to look closely at 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.
It is possible to find REOs with money-making potential, and many people do very well flipping foreclosures. Still there are also many REOs that are not good buys and may lose money.
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 typically hire 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", it's often prudent to include an inspection contingency in your offer that gives you time to check for unseen damage and withdraw the offer if you find it.
As with making any offer on real estate, providing documentation showing your ability to pay may make your offer more attractive, such as a pre-approval letter from a lender.
After you've submitted your offer, it's customary for the bank to make a counter offer. From there it will be up to you to decide whether to accept their counter, or make another counter offer.
Your deal might be settled in a single 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.
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