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Buying REO property or a foreclosure in West Orange?
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Just as with any property purchase, your smartest move is to hire a professional real estate agent.
If you have any questions regarding real estate in West Orange, New Jersey, call me or send me an e-mail.
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What's an REO?
"REO" or Real Estate Owned are homes which have been foreclosed upon that the bank or mortgage company presently holds. 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. You must also be able to pay with cash in hand. To top everything off, you'll receive the property totally as is. That might comprise of current liens and even current tenants that may require removal.
A bank-owned property, by contrast, is a more tidy and attractive transaction. The REO property did not find a buyer during foreclosure auction. The lender now owns it. The lender will deal with the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.
Note that REOs may be exempt from typical disclosure requirements.
For example, in Nevada, it is optional for foreclosures to have a Property Disclosure Statement,
a document that ordinarily requires sellers to disclose any defects of which they are knowledgeable.
By hiring Jordan Baris, Inc., you can rest assured knowing all parties are fulfilling New Jersey state disclosure requirements.
Are REO properties a bargain in Essex County?
It's frequently assumed that any REO must be a steal and a possibility for easy money. This frequently isn't true. You have to be prudent about buying a REO if your intent is profit from the sale. Even though the bank is often eager to offload it fast, they are also looking to minimize any losses.
When contemplating 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 flipping foreclosures. Still there are also many REOs that are not good buys and not likely to turn a profit.
Prepared to make an offer?
Most mortgage companies have staff dedicated to REO that you'll work with while buying REO property from them. To get their properties advertised on the local MLS, the lender will usually hire a listing agent.
Prior to making your offer, you'll want to contact either the listing agent or REO department at the bank and learn 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 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 hidden damage and cancel the offer if you find it.
If, as a buyer, you can provide documentation showing your ability to pay, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This holds for any type of real estate offer.)
After you've made your offer, you can expect the bank to counter offer. Then it will be your decision whether to accept their counter, or make another counter offer.
Your deal could be settled in one day, but that's rare. Since offers and counter offers usually give the other party a day or longer to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer. Jordan Baris, Inc. is are used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.
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