Looking for REO property or a foreclosure in Novi?
Purchasing a bank-owned property is not something to be taken casually.
What's an REO?
"REO" or Real Estate Owned are homes which have completed the foreclosure process that the bank or mortgage company presently owns. This is different than real estate 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 added during the foreclosure process. You must also be prepared to pay with cash in hand. To top everything off, you'll receive the property totally as is. That possibly may comprise of prevailing liens and even current residents that may require eviction.
A bank-owned property, by contrast, is a much neater and attractive deal. The REO property did not find a buyer during foreclosure auction. The bank now owns it. The bank will deal with 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.
Take notice that REOs may be exempt from normal disclosure requirements.
For instance, in California, banks do not have to give a Transfer Disclosure Statement,
a document that ordinarily requires sellers to disclose any defects they are aware 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 believed that any REO must be a bargain and a chance for guaranteed profit. This frequently isn't true. You have to be cautious about buying a REO if your intent is profit from the sale. Even though the bank is usually eager to sell it quickly, they are also looking to get as much as they can for it.
When considering what to pay for a foreclosure, you need to look closely at 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.
There are bargains with potential to make money, and many people do very well buying foreclosures. However there are also many REOs that are not good buys and may lose money.
Prepared to make an offer?
Most lenders have a department dedicated to REO that you'll work with when buying REO property from them. To get their properties advertised on the local MLS, the lender will usually use a listing agent.
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 their knowledge about the condition of the property and what their process is for receiving offers. Since banks typically sell REO properties "as is", you may want 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 proving your ability to pay, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This is generally true for any real estate offer.)
Once you've submitted your offer, it's customary for the bank to respond with a counter offer. At this point it will be your choice whether to accept their counter, or submit another counter offer.
Understand, you'll be dealing with a process that probably involves a group of people at the bank, and they don't work evenings or weekends. It's typical for there to be days or even weeks of negotiating back and forth. RE/MAX Classic is accustomed to these situations and will work to ensure there are no undue delays.
All agents of RE/MAX Classic are licensed in the State of Michigan to do business in the State of Michigan per license law requirements setforth by the state requirements.
When considering what to pay for a foreclosure, you need to look closely at 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.
There are bargains with potential to make money, and many people do very well buying foreclosures. However there are also many REOs that are not good buys and may lose money.
