Interested in REO property or a foreclosure in Maryland?
Smart consumers will turn to a seasoned pro when considering the purchase of a foreclosed property. I am a CDPE (Certified Distressed Property Expert). If you have questions regarding real estate in Maryland, Maryland, call me
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What's an REO?
"REO" is short for Real Estate Owned. These are houses which have been through foreclosure that the bank or mortgage company now owns. 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 accumulated during the foreclosure process. The buyer must also be prepared to pay with cash in hand. And on top of all that, you'll receive the property 100% as is. That could consist of prevailing liens and even current tenants that need to be removed.
A bank-owned property, by contrast, is a much neater and attractive transaction. The REO property was unable to find a buyer during foreclosure auction. Now the bank owns it. The lender will deal with the removal of tax liens, evict occupants if needed and generally organize for the issuance of a title insurance policy to the buyer at closing.
You should be aware that REOs may be exempt from standard disclosure requirements. For instance, in California, banks do not have to give a Transfer Disclosure Statement, a document that usually requires sellers to tell you about any defects of which they are knowledgeable. By hiring Remax Components, you can rest assured knowing all parties are fulfilling Maryland state disclosure requirements.
Are REO properties a bargain in Maryland?
It's commonly presumed that any foreclosure must be a steal and an opportunity for easy money. This often isn't true. You have to be cautious about buying a REO if your intent is to make money. While it's true that the bank is often eager to offload it soon, they are also looking to minimize any losses.
When contemplating the value of 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 and selling foreclosures. However, there are also many REOs that are not good buys and not likely to turn a profit.
All set to make an offer?
Most banks have staff 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 often 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 concerning the condition of the property and what their process is for taking offers. Since banks usually 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 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, it's customary for the bank to respond with a counter offer. Then it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer. Your transaction could be settled in a single day, but that's usually not the case. 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. Remax Components is used to working around the schedules of this type of seller and will do everything possible to ensure there are no unnecessary delays.