Interested in REO property or a foreclosure in Hoffman Estates?
Investing in a bank-owned property is not something to be taken casually.
What's an REO?
"REO" is short for Real Estate Owned. These are houses which have been foreclosed upon that the bank or mortgage company currently possesses. This differs from a property 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 able to pay with cash in hand. Finally, you'll get the property completely as is. That could comprise of existing liens and even current tenants that need to be thrown out.
A bank-owned property, conversely, is a more tidy and attractive proposition. The REO property didn't find a buyer during foreclosure auction. The bank now owns it. The lender will take care of the elimination of tax liens, evict occupants if needed and generally organize 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 Nevada, it is optional for foreclosures to have a Property Disclosure Statement,
a document that usually requires sellers to make known any defects of which they are aware.
By hiring Heldt Realty, you can rest assured knowing all parties are fulfilling Illinois state disclosure requirements.
Is REO property in Hoffman Estates a bargain?
It is commonly believed that any REO must be a good buy and an opportunity for guaranteed profit. This isn't necessarily true. You have to be very careful about buying a repossession if your intent is to make money off of it. While it's true that the bank is often anxious to offload it quickly, they are also looking to minimize any losses.
Look closely at the listing and sales prices of competing homes in the neighborhood when considering the purchase of an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in.
There are bargains with potential to make money, and many people do very well flipping foreclosures. But there are also many REOs that are not good buys and may not be money makers.
Prepared to make an offer?
Most lenders have a department dedicated to REO that you'll work with in buying REO property from them. Normally 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 find out as much as you can about what they know about the condition of the property and what their process is for receiving offers. Since banks typically sell REO properties "as is", you'll want to be sure and include an inspection contingency in your offer that gives you time to check for unseen damage and retract 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 submitted your offer, it's customary for the bank to respond with a counter offer. Then it will be your decision whether to accept their counter, or make another counter offer.
Realize, you'll be contending with a process that usually involves a group of people at the bank, and they don't work evenings or weekends. It's not uncommon for the process of offers and counter offers to take days or even weeks.
Look closely at the listing and sales prices of competing homes in the neighborhood when considering the purchase of an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in.
There are bargains with potential to make money, and many people do very well flipping foreclosures. But there are also many REOs that are not good buys and may not be money makers.
