Making an offer on REO property or a foreclosure in Chicago?


	Investing in a bank-owned property is not something to be taken lightly. Should you have questions about real estate in Chicago, Illinois, call me or send me an e-mail.

What is an REO?

"REO" or Real Estate Owned are homes which have completed the foreclosure process that the bank or mortgage company currently holds. This is unlike a property up for foreclosure auction. American International Realty Corp. has experience to share with foreclosures and bank owned properties in Chicago, Illinois

American International Realty Corp. has experience to share with foreclosures and bank owned properties in Chicago, Illinois

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 ready to pay with cash in hand. And on top of all that, you'll get the property entirely as is. That possibly will include existing liens and even current residents that need to be removed.

A bank-owned property, by contrast, is a more tidy and attractive proposition. The REO property did not find a buyer during foreclosure auction. Now the lender owns it. The lender will deal with the elimination of tax liens, evict occupants if needed and generally arrange for the issuance of a title insurance policy to the buyer at closing.

Note that REOs may be exempt from standard disclosure requirements. For example, in North Carolina, it is optional for foreclosures to have a Property Disclosure Statement, a document that typically requires sellers to disclose any defects they are aware of. By hiring American International Realty Corp., you can rest assured knowing all parties are fulfilling Illinois state disclosure requirements.

Am I guaranteed a bargain when buying an REO property in Chicago?

It is frequently assumed that any REO must be a bargain and a chance for guaranteed profit. This isn't always true. You have to be very careful about buying a repossession if your intent is profit from the sale. While it's true that the bank is often eager to sell it quickly, they are also looking to get as much as they can for it.

American International Realty Corp. has experience to share with foreclosures and bank owned properties in Chicago, Illinois

Look carefully at the listing and sales prices of comparable properties in the neighborhood when making an offer on an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in. There are bargains with potential to make money, and many people do very well buying foreclosures. However there are also many REOs that are not good buys and may lose money.

Prepared to make an offer?

Most mortgage companies have staff 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 frequently use a listing agent.

Prior to making your offer, you'll want to contact either the listing agent or REO department at the bank and learn as much as you can about their knowledge regarding the condition of the property and what their process is for getting offers. Since banks typically sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for hidden damage and withdraw the offer if you find it. If, as a buyer, you can provide documentation proving your ability to secure financing, 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 made your offer, it's customary for the bank to respond with a counter offer. Then it will be up to you to decide whether to accept their counter, or make another counter offer. Be aware, you'll be working with a process that probably involves multiple 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. American International Realty Corp. is are used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.