Interested in REO property or a foreclosure in Plymouth?
Just as with any home purchase, your smartest move is to hire a professional real estate agent. If you have any questions about real estate in Plymouth, Michigan, call me or send me an e-mail.
What is an REO?
"REO" means Real Estate Owned. These are properties which have been through foreclosure that the bank or mortgage company now possesses. 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 amassed during the foreclosure process. The buyer must also be able to pay with cash in hand. Finally, you'll accept the property completely as is. That could include current liens and even current tenants that may require removal.
A bank-owned property, on the contrary, is a more tidy and attractive option. The REO property did not find a buyer during foreclosure auction. The bank now owns it. The lender will handle 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.
You should 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 normally requires sellers to disclose any defects they are knowledgeable of. By hiring Jeff Glover & Associates, you can rest assured knowing all parties are fulfilling Michigan state disclosure requirements.
Am I guaranteed a bargain when purchasing a bank owned property in Plymouth?
It's occasionally assumed that any foreclosure must be a bargain and an opportunity for guaranteed profit. This frequently isn't true. You have to be cautious about buying a repossession if your intent is to make money off of it. While it's true that the bank is usually anxious to sell it fast, they are also looking to minimize any losses.
When considering what to pay for REO property, 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. The bargains with money making potential exist, and many people do very well flipping foreclosures. However there are also many REOs that are not good buys and may lose money.
Time to make an offer?
Most banks 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 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 what they know regarding the condition of the property and what their process is for accepting offers. Since banks typically sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for unknown 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.
After you've made your offer, it's customary for the bank to make a counter offer. Then it will be your decision whether to accept their counter, or make another counter offer. Your transaction could be final in a single day, but that's rare. 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.
Jeff Glover & Associates 459 S Main St Plymouth, MI 48170
When considering what to pay for REO property, 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. The bargains with money making potential exist, and many people do very well flipping foreclosures. However there are also many REOs that are not good buys and may lose money.
