What’s Different When Buying a Foreclosure / REO
If you’re in the market for a new home, foreclosed also known as REO (Real Estate Owned) properties can be really appealing. It’s easy enough to find a listing in a neighborhood that would otherwise be out of your price range, but don’t be fooled by what looks like a great deal. Buying a foreclosure is something you should seriously evaluate prior to shopping or writing an offer.
If you’re up for the inherent risks, you’ll want to know how it differs from a normal real estate transaction, what options you have, and where to look.
In general, when purchasing a foreclosure expect a very impersonal experience. You’re most likely communicating with the lender or bank that owns the property and for them it’s just a business decision. If the numbers make sense they’ll make the deal, and if not then they won’t.
Understand that foreclosure is a process and there are multiple stages during which the homeowner can resolve the delinquency or a potential buyer can make a purchase. At certain stages you can get a better deal while taking on more risk, and in other stages you can absorb less risk but at the sacrifice of a bargain.
As a group, these are considered “distressed properties.” They are distressed because of both the financial situation of the owner and also the physical condition of the property.
It’s critical to understand that distressed properties are often treated poorly by the previous owner; after all, someone was forced to leave their home. Chances are that if the owner wasn’t able to stay current on the bills, they weren’t able to stay current on maintenance or repairs either.
Often the owners will feel that the lender is acting in bad faith and will purposely cause damage to the home prior to their eviction. This damage can range from superficial, to the removal of hardware and appliances, and even the intentional damage of structural elements in the home.
That’s why it’s critical that you understand the risks you are taking and are willing to endure the as-is nature of the purchase and all of the baggage that entails.
FACT NOTE: Foreclosures come in four primary flavors: Pre-foreclosures or short sale, auction, real estate owned (REO), and government owned.
Understand the Different Types of Foreclosure Properties
There are various stages of foreclosure and various types of entities that may be in possession of the property during the transaction. Each of these scenarios has its own caveats, so be conscious of the type of foreclosure you are dealing with and be diligent with any special considerations.
The Areas I Serve
Middlesex – Edison – North Edison – New Brunswick – East Brunswick – North Brunswick – South Brunswick – Woodbridge – Piscataway – Perth Amboy – Old Bridge – Monroe Township – Sayreville – Metuchen – South Plainfield – Carteret – South Amboy – Highland Park – South River – Dunellen – Spotswood – Milltown – Cranbury – Plainsboro – Jamesburg – Fords – Helmetta – Port Reading – Sewaren – Laurence Harbor – Madison Park – Brownville
Union – Elizabeth – Westfield – Cranford – Scotch Plains – Linden – Plainfield – Rahway – Summit – Clark – Roselle – Fanwood – Springfield Township – Roselle Park – Mountainside – New Providence – Hillside – Berkeley Heights – Kenilworth – Garwood – Winfield Township
Bridgewater Township – Franklin Township – Somerville – Hillsborough – Warren – Basking Ridge – Bernardsville – Bound Brook – Raritian – Bernards Township – Bedminster – Branchburg Township – Watchung – Manville – Montgomery Township – North Plainfield – Gladstone – Far Hills – Green Brook – South Bound Brook – Franklin Park – Belle Mead – Skillman – Martinsville – Rocky Hill – Millstone – Lyons – East Millstone – Zarephath – Blaweburg – Middlebush – Griggstown – Bradley Gardens – Harlingen – Green Knoll – Blackwells Mills – Six Mile Run – Gladstone – Clyde