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Interested in REO property or a foreclosure in Chicago?
What is an REO?"REO" or Real Estate Owned are houses which have been foreclosed upon that the bank or mortgage company currently possesses. 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 able to pay with cash in hand. To top everything off, you'll receive the property completely as is. That could consist of current liens and even current occupants that need to be removed.
A bank-owned property, on the other hand, is a more tidy and attractive transaction. The REO property was unable to find a buyer during foreclosure auction. The bank now owns it. The lender will take care of the removal of tax liens, evict occupants if needed and generally arrange for the issuance of a title insurance policy to the buyer at closing.
Do be aware that REOs may be exempt from normal disclosure requirements. In California, for example, banks do not have to give a Transfer Disclosure Statement, a document that typically requires sellers to reveal any defects of which they are aware. By hiring Great Street Properties, you can rest assured knowing all parties are fulfilling Illinois state disclosure requirements.
Am I guaranteed a low price when investing in a bank owned property in Chicago?It is commonly believed that any foreclosure must be a good buy and a chance for easy money. This isn't always true. You have to be very careful about buying a REO if your intent is make a profit. Even though the bank is often eager to sell it quickly, they are also motivated to minimize any losses.
 When contemplating the value of REO property, 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. The bargains with money making potential exist, and many people do very well buying and selling foreclosures. But there are also many REOs that are not good buys and not likely to turn a profit.
Ready to make an offer?Most mortgage companies have a department dedicated to REO that you'll work with in buying REO property from them. To get their properties advertised on the local MLS, the lender will often use a listing agent.
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 their knowledge concerning the condition of the property and what their process is for taking offers. Since banks usually 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 unknown damage and terminate the offer if you find it. If, as a buyer, you can provide documentation demonstrating 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 real estate offer.)
Once you've presented your offer, it's customary for the bank to counter offer. From there it will be your decision whether to accept their counter, or offer a counter to the counter offer. Understand, you'll be working with a process that probably involves a group of people at the bank, and they don't work evenings or weekends. It's not unusual for there to be days or even weeks of negotiating back and forth.
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Corporate Office:
22 N Morgan Street
Suite 107
Chicago, IL 60607
Phone: 312.733.9100
Fax: 312.733.9768
Abe@thereobroker.com |
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