Purchasing REO property or a foreclosure in Loudin County?
Investing in a bank-owned property is not something to be taken casually.
Should you have questions about real estate in Lenoir City, Tennessee, call us
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What's an REO?
"REO" stands for Real Estate Owned. These are homes which have been through foreclosure that the bank or mortgage company presently owns. 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 accrued during the foreclosure process. The buyer must also be ready to pay with cash in hand. Finally, you'll accept the property completely as is. That may consist of prevailing liens and even current occupants that may require expulsion.
A bank-owned property, conversely, is a more tidy and attractive deal. The REO property was unable to find a buyer during foreclosure auction. Now the bank owns it. The lender will deal with 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.
Note that REOs may be exempt from typical disclosure requirements.
For instance, in California, banks do not have to give a Transfer Disclosure Statement,
a document that usually requires sellers to reveal any defects of which they are aware.
By hiring Smoky Mountain Realty, you can rest assured knowing all parties are fulfilling Tennessee state disclosure requirements.
Is REO property in Lenoir City a bargain?
It is sometimes presumed that any REO must be a good deal and a chance for easy money. This isn't necessarily true. You have to be very careful about buying a REO if your intent is to profit from the sale. While it's true that the bank is often eager to sell it quickly, they are also motivated to minimize any losses.
When considering what to pay for a foreclosure, 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.
The bargains with money making potential exist, 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 lenders have a department dedicated to REO that you'll work with while buying REO property from them. Typically 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 find out as much as you can about their knowledge regarding the condition of the property and what their process is for taking offers. Since banks most commonly 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 cancel the offer if you find it.
As with making any offer on real estate, providing documentation of your ability to secure financing may make your offer more attractive, such as a pre-approval letter from a lender.
After you've made your offer, you can expect the bank to respond with 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 might be final in one day, but that's usually not the case. 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. Smoky Mountain Realty is accustomed to these situations and will work to ensure there are no unnecessary delays.