Buying REO property or a foreclosure in East Islip?

What's an REO?

"REO" is short for Real Estate Owned. These are properties which have completed the foreclosure process and are now held by the bank or mortgage company. This is unlike 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 added during the foreclosure process. The buyer must also be ready to pay with cash in hand. To top everything off, you'll accept the property 100% as is. That might comprise of prevailing liens and even current tenants that need to be kicked out.

A bank-owned property, on the other hand, is a much neater and attractive proposition. The REO property didn't find a buyer during foreclosure auction. The lender now owns it. The lender will attend to the elimination of tax liens, evict occupants if needed and generally prepare 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 typically requires sellers to disclose any defects they are informed of. By hiring Heartland Mortgage Corp, you can rest assured knowing all parties are fulfilling New York state disclosure requirements.

Is REO property in East Islip a bargain?

It's occasionally thought that any REO must be a steal and a possibility for guaranteed profit. This isn't necessarily true. You have to be cautious about buying a repossession if your intent is to make money. Even though the bank is usually anxious to offload it soon, they are also motivated to get as much as they can for it.

When contemplating the value of 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 flipping foreclosures. However, there are also many REOs that are not good buys and may not be money makers.

Prepared 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 usually hire 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 their knowledge about the condition of the property and what their process is for getting 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 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 is generally true for any real estate offer.)

Once you've submitted your offer, it's customary for the bank to make a counter offer. From there it will be your choice whether to accept their counter, or submit another counter offer. Understand, you'll be contending with a process that probably involves a group of people at the bank, and they don't work evenings or weekends. It's not uncommon for there to be days or even weeks of going back and forth. Heartland Mortgage Corp is used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.