People come to Cherry Hill for the school, the mall and of course the location. Cherry Hill real estate New Jersey is full of properties for families and investors to look at and buy.
While there may be newer and nicer homes on the market, there are also properties that are real estate owned. These properties are a good investment for investors because they are profitable.
Real estate owned or REO properties are owned by a lender after the property did not successfully sell at an auction. These lenders are typically a bank, government agency, or government loan insurer.
At auction, a beneficiary will typically set the starting bid for at least the outstanding loan amount. If there are no bidders on the property, the beneficiary will legally repossess the property.
When this happens, it is normally because the outstanding loan amount is higher than the value of the property on the market. As soon as the property is repossessed by the beneficiary, it is put into their books as a REO property and categorized as an asset (non-performing asset).
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When a property goes into a distressed status it means that the homeowner or borrower has failed to pay the mortgage. In turn, the beneficiary will want to figure out the equity of the property.
One of the most popular ways for a beneficiary to do this is by obtaining a Broker's Price Opinion (BPO) or ordering an appraisal. Based on the amount of the equity, the bank will decide if a short sale is in order if the home owner requested one. If there is no short sale the beneficiary will go on with the foreclosure process. If the property isn’t sold at the short sale or auction it becomes a REO property.
The property also becomes real estate owned if the bank buys it at a public foreclosure auction sale. The property reverts back to the bank and it is a REO property that anybody can buy.
When the property is repossessed and classified as REO, the beneficiary will go about selling it on its own or with help from a REO Asset Manager. The beneficiary should remove all liens and debts on the home to try and resell it to the public either through future auctions, direct marketing through a real estate broker, or by itself.
Some of the REO properties aren’t in the best condition and require maintenance and repair to be in line with upkeep laws along with being available to the public. This is normally handled by the mortgage servicer and provided by a specialized property preservation company. The services they offer include securing a property, debris removal, property maintenance and rehabilitation.
When it comes down to it, there are three ways someone can purchase a REO or foreclosed property.
- In the first phase of default, investors and homebuyer can purchase a property before an auction takes place.
- Investors can purchase a property at the public foreclosure auction.
- A property can be purchased from a band or lending institution if there are no bidders at the public sale and the bank gets the property.
There are a lot of reasons why people choose to invest in REO properties. They might think it is a better deal or just like to rehabilitate properties. There are four big reasons, however, that always catch the attention of buyers and investors.
- To start, you will not have to deal with homeowners. Because the property is owned by the bank, anybody previously involved in the home should be out of the way. If you plan on negotiating the price of the property, you also will not have to worry about the bank having an emotional attachment to it. They just want it off their hands.
- When you purchase a REO property, there are no outstanding taxes. If the previous homeowner stopped paying property taxes, you shouldn’t have to worry about them. The bank should waive these fees but it is always safe to do a title check on the property.
- You have the option for a home inspection once the bank owns the property. If you are bidding on it at auction, then you get what you get and you might throw a fit later. When it is a REO property you can walk through and have the opportunity for an inspection before you make any final decisions on buying the property.
- REO properties are below market value and might seem like a steal until you figure out how much work you have to put into the home. This should not scare you away. Buying a new home will cost you a lot more than REO properties and overall will be a good investment.
If you are interested in a REO property, having a professional and experienced realtor by your side is essential. You won’t have to worry about being cheated with the prices during negotiations. We will take your price and get as close as possible to it if not lower. REO properties are good investments for new families and investors. They are waiting for you all over New Jersey and even here in Cherry Hill.