Interested in REO property or a foreclosure in Novi?
Savvy consumers will turn to a seasoned pro when considering a foreclosed property.
What's an REO?
"REO" or Real Estate Owned are properties which have been through foreclosure that the bank or mortgage company presently possesses. This is different than 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 amassed during the foreclosure process. The buyer must also be able to pay with cash in hand. And on top of all that, you'll get the property completely as is. That possibly will involve standing liens and even current occupants that may require removal.
A bank-owned property, conversely, is a much neater and attractive option. The REO property was unable to 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.
Do be aware that REOs may be exempt from standard 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 they are knowledgeable of. By hiring RE/MAX Classic, you can rest assured knowing all parties are fulfilling Michigan state disclosure requirements.
Are REO properties a bargain in Novi?
It is commonly presumed that any REO must be a bargain and an opportunity for guaranteed profit. This isn't always the case. You have to be cautious about buying a REO if your intent is to make money off of it. While it's true that the bank is often eager to sell it quickly, they are also looking to minimize any losses.
When pondering what to pay for REO property, 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. It is possible to find REOs with money-making potential, and many people do very well buying foreclosures. However, there are also many REOs that are not good buys and may not be money makers.
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 discover as much as you can about what they know concerning 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 hidden damage and cancel the offer if you find it. As with making any offer on real estate, your offer may be more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
Once you've presented your offer, you can expect the bank to make a counter offer. Then it will be your decision whether to accept their counter, or offer a counter to the counter offer. Be aware, you'll be contending with a process that usually involves several people at the bank, and they don't work evenings or weekends. It's quite common for there to be days or even weeks of going back and forth. RE/MAX Classic is used to working around the schedules of this type of seller and will do everything possible to ensure there are no unnecessary delays.