Buying Foreclosures/Bank Owned Properties
When looking for Outer Banks Foreclosures (i.e., Bank Owned Properties) you need an experienced Realtor to help guide you through the process. Not all Foreclosures and Short Sales are the best deals on the market. We are only a handful of Realtors on the Outer Banks to earn the National Association of Realtors Short Sale & Foreclosure Resource Certification.
Put our experience and knowledge to work as your Foreclosure and Short Sale Buyer’s Agent.
Foreclosures (i.e. Bank Owned Properties) Explained
With a record number of homes falling into foreclosure, many real estate investors and homebuyers are pouring their money into the foreclosure market. Foreclosure is a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan. It begins when a borrower/owner defaults on loan payments and the lender files a public default notice or a lis pendens (Latin for “lawsuit pending”).
Ultimately, the foreclosure process can end one of four ways:
The borrower/owner pays off the default amount to reinstate the loan during a grace period known as pre-foreclosure
The borrower/owner sells the property to a third party during pre-foreclosure, allowing the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history
A third party buys the property at a public auction at the end of the pre-foreclosure period
The lender takes ownership of the property, usually with the intent to re-sell. The lender can take ownership through an agreement with the borrower/owner during pre- foreclosure or by buying back the property at the public auction
There are different stages in the foreclosure process, and each stage offers unique advantages and disadvantages for the buyer. Most buyers prefer buying bank-owned properties because they’re uncomfortable dealing with distressed homeowners. Under this buying stage, the lender or bank has taken ownership of the property, either through an agreement with the owner during pre-foreclosure or at the public auction. REO means “real estate owned” by the lender and indicates the house has already gone through the foreclosure process and has been repossessed by the lender. The lender usually sells the property to recover the unpaid loan amount and typically clears the title for any buyer. At this stage of foreclosure, it’s more likely the property will be listed for sale on the Multiple Listing Service (MLS) used by real estate agents.
Take note that the bank’s primary goal is to at least break even on all the costs that it has sunk into the property. That includes the unpaid balance of the loan, the expenses associated with the foreclosure proceedings, other liens and repairs to the property. Your goal as a buyer is to purchase the property below market value, minus any estimated repair costs (most REOs are “as is” properties).
There is no set timeframe within which the banks must sell their REOs. However, banks often want to get REOs off their books rapidly. As a result, many REOs sell quickly.
Here’s an example of the type of language, one may find in a foreclosed/bank owned listing:
“Pre-approval or Proof of Funds letter MUST be attached to Offer. Earnest Money must be certified funds and held with the listing firm. Home is being sold AS IS – SPECIAL WARRANTY DEED. Pre approval required before making an offer. Buyer may be required to use seller’s attorney and pay transfer tax.”
You may also be required to have a pre-qualification letter from the lending institution that owns the property. This does not mean you are required to use them as a lender, but they will not accept any offers without this letter.
Sellers Addendums come after an accepted offer. Often Buyers must use seller’s attorney for closing and are often required to pay the transfer tax. This is common, and many times the agent has no control over what the bank is willing to disclose. The lenders have their guidelines in how the sell the properties they take back from their borrowers.
It is very important that the proper path of investigation is taken for discovering all the facts about the property. Your real estate attorney (required by NC law to purchase property) will make sure that you understand the position the title is in, and if there are any liens or unknown encumbrances on the property.
There is absolutely no cost to you to for our services as your Realtor® to assist you in the purchase of your foreclosure property. We can help you negotiate, run CMA’s, coordinate your closing, prepare offers, and other required paperwork related to any foreclosure properties listed in the Outer Banks MLS.
Before you set sail on your foreclosure buying adventure, contact us to help you navigate the foreclosure market in the Outer Banks of North Carolina.