Consider a Foreclosure - Advantages of REOs (as experienced by a Sussex County NJ expert)

Part 5 of Distressed Properties are NOT Black Holes!, a six part series based on experience from a Sussex County real estate agent.

Many buyers rule out all foreclosures due to a lack of facts. I think this is a huge mistake and potential Sussex County, NJ, buyers are shorting themselves by not at least considering REOs. Part 6 will discuss the "cons" but here are some of the "pros."

Value: The homes are usually excellent value for the price. Great value. Top value. Wonderful value. Hope I'm making my point... (Now, distressed properties in Sussex County NJ and elsewhere are not the only good deals around. I always show my buyers all properties that fit their criteria - one of which is usually that they want a bargain.)

Condition: Not all bank-owned properties are in terrible shape. Sure, some are uninhabitable without a lot of work. Some need lots of cosmetics - painting, new carpeting, etc. Others, however, are in move-in condition.

Dealing directly with the owner: Pretty much like the relationship with any seller of a property, the listing agent has a direct contact at the bank.

Few multiple liens: All mortgages were wiped when the foreclosure took place. Even if other liens exist (taxes, home-owner-association dues, water bills), in my experience, the new owner is in the process or planning to pay them off. There may be banks that expect buyers to pay items normally covered by the seller, but I haven't encountered any yet.

Faster deals than with Short Sales: There is no third-party who adds a layer to the transaction process. Banks already have the comps in hand and are WAITING to make a decision on an offer - they particularly favor offers where the closing is scheduled within 30 days. From offer to ratification is pretty quick; 3 - 4 business days in my Sussex County NJ REO experience. Lengthy back-and-force negotiations would increase that but it does not take long at all to get an answer on an REO. Once I had to wait over 24 hours for a counteroffer on an REO; my personal contact was sick and I opted not to hit the "for immediate help" key.

Once a verbal agreement is reached, the bank wants the buyer to initial all changes to the contract. The listing agent sends this amended form back to the bank, where it can take a couple days to process because it may need to go to multiple departments for the authorized signatures.

Commission fixed: The commission paid to your agent is set and agreed to in advance. For Short Sales, a bank might refuse to pay the full commission; this MIGHT mean you make up a shortfall. (Something to settle in advance with your agent when making an offer on a Short Sale listing!!!)

• Part 1 - Distressed Properties are NOT Black Holes!
• Part 2 - Short Sales can be a great thing despite Timeframe & Lowballs
• Part 3 - So You Want a Foreclosure: Bank-owned Properties - REOs
• Part 4 - Want to Steal a Foreclosure? Get the REO facts.
• Part 5 - Consider a Foreclosure - Advantages of REOs
• Part 6 - Pitfalls of Foreclosures. Disadvantages of REOs for Buyers

Copyright © 2009, Irene Kennedy, all rights reserved. This blog post from RealtorIrene.com represents Irene's personal musings.