Buying REO property or a foreclosure in Rock Hill?
Investing in a bank-owned property is not something to be taken casually.
Should you have any questions about real estate in Rock Hill, South Carolina, call us
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What's an REO?
"REO" is Real Estate Owned. These are houses which have been foreclosed upon and are presently possessed by the bank or mortgage company. 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 accrued during the foreclosure process. You must also be ready to pay with cash in hand. To top everything off, you'll get the property completely as is. That may consist of standing liens and even current tenants that may require expulsion.
A bank-owned property, on the contrary, is a much neater and attractive transaction. The REO property didn't find a buyer during foreclosure auction. Now the lender owns it. The bank will attend to the removal of tax liens, evict occupants if needed and generally plan for the issuance of a title insurance policy to the buyer at closing.
Do be aware that REOs may be exempt from typical disclosure requirements.
For example, in California, banks are not required to give a Transfer Disclosure Statement,
a document that ordinarily requires sellers to reveal any defects of which they are informed.
By hiring The Kim Hamrick Team, you can rest assured knowing all parties are fulfilling South Carolina state disclosure requirements.
Are REO properties a bargain in Rock Hill?
It's commonly assumed that any foreclosure must be a good buy and a possibility for easy money. This frequently isn't true. You have to be very careful about buying a repossession if your intent is to make money. While it's true that the bank is typically anxious to sell it promptly, they are also motivated to get as much as they can for it.
When pondering what to pay for 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. Still, there are also many REOs that are not good buys and not likely to turn a profit.
All set to make an offer?
Most lenders have a department dedicated to REO that you'll work with in 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 discover 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 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 hidden damage and terminate the offer if you find it.
If, as a buyer, you can provide documentation showing your ability to secure financing, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This holds for any real estate offer.)
After you've submitted your offer, it's customary for the bank to counter offer. At this point it will be your decision whether to accept their counter, or offer a counter to the counter offer.
Your transaction could be final in a single 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. The Kim Hamrick Team is accustomed to these situations and will work to ensure there are no undue delays.