In response to delinquent or defaulted payments, a property becomes an REO (another term for bank owned property) when a lender takes possession of a property. Most bank owned properties are because of late payments, no payments, or missed deadlines. In general, there are three ways in which a property becomes bank-owned:
Deed-in-lieu of foreclosure
The acquisition of bank owned property is similar to any other real estate transaction. You will find a property you are interested in, make an offer, negotiate, sign a contract, complete due diligence, and close. There are a few differences though. You will have to purchase the house “as is”. While most people do not believe you can negotiate with banks, this is not truly the case. With secured funds or a pre-approval letter for a mortgage, you can negotiate price, what costs are who’s responsibility, right to inspect the property, and a closing date.
Because the bank is motivated to move the property, price is one of the easiest things to negotiate. A bank generally knows how much a property is worth through a broker’s price opinion. You may be able to justify a lower offer because of the local market, comparable sales, property condition, and more. Proving yourself as the most reliable and easiest buyer may award you with even deeper savings. If you are a real estate investor who buys multiple properties through the same bank, you could see saving up to 30%. Contact an effective attorney to help you forge a lasting relationship with lenders looking for an easy offload of property.
Juan C. Velasco, Esq. is a trusted attorney who concentrates on bankruptcy, family law, real estate, and estate matters who has been serving the New Jersey area for over 25 years. If you are in need of experienced legal counsel, please contact Velasco Law Office and we will be happy to assist you.