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Making an offer on REO property or a foreclosure in Aldie?
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Making an offer on a bank-owned property is not something to be taken lightly.
If you have any questions regarding real estate in Aldie, Virginia, call me or send me an e-mail.
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What is an REO?
"REO" is an abbreviation for Real Estate Owned. These are homes which have been through foreclosure and are currently held by the bank or mortgage company. This differs from 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. The buyer must also be willing to pay with cash in hand. Finally, you'll get the property entirely as is. That possibly will comprise of prevailing liens and even current tenants that may require expulsion.
A bank-owned property, conversely, is a more tidy and attractive deal. The REO property didn't find a buyer during foreclosure auction. Now the lender owns it. The lender will handle 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.
You should be aware that REOs may be exempt from typical disclosure requirements.
For instance, in California, banks are exempt from giving a Transfer Disclosure Statement,
a document that ordinarily requires sellers to disclose any defects of which they are knowledgeable.
By hiring Belmont Realty, you can rest assured knowing all parties are fulfilling Virginia state disclosure requirements.
Are REO properties a bargain in Loudoun County?
It's frequently assumed that any foreclosure must be a good deal and an opportunity for guaranteed profit. This isn't always the case. You have to be prudent about buying a repossession if your intent is profit from the sale. Even though the bank is typically anxious to sell it quickly, they are also looking to get as much as they can for it.
Look closely at the listing and sales prices of comparable homes 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.
It is possible to find REOs with money-making potential, and many people do very well buying foreclosures. Still there are also many REOs that are not good buys and may lose money.
All set to make an offer?
Most mortgage companies have a department dedicated to REO that you'll work with when buying REO property from them. Commonly the REO department will use a listing agent to get their REO properties listed on the local MLS.
Before making your offer, you'll want to contact either the listing agent or REO department at the bank and discover as much as you can about what they know regarding the condition of the property and what their process is for accepting offers. Since banks almost always sell REO properties "as is", it's often prudent 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 demonstrating your ability to pay, 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, it's customary for the bank to make a counter offer. At this point it will be up to you to decide whether to accept their counter, or submit another counter offer.
Your deal could be final in one day, but that's rare. 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. Belmont Realty is are used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.
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