In the suburban town of Mt Laurel, there are a variety of neighborhoods and developments that are ideal for families and investors. It is a great area and Mt Laurel real estate New Jersey has a lot to offer.
There are many nice, beautiful, and new homes to look at in the area, but as someone seeking a good investment, you may want to consider real estate owned properties.
Real estate owned or REO properties are owned by a lender, usually a bank, government agency, or government loan insurer, after the property failed to be sold at a public foreclosure auction.
At a public foreclosure auction, a beneficiary will usually list the starting bid for at least the outstanding loan amount. If nobody bids on the property, the beneficiary will legally repossess the property. The reason this happens is normally due to the fact the outstanding loan is higher than the market value of the property at the time.
After the beneficiary repossesses the property, they will list it in their books as a REO property and categorized as an asset (non-performing asset).
Mt Laurel, NJ Real Estate
There are a lot of nice houses in the Mt Laurel, NJ real estate system, but if you are looking for a good investment, REO properties are something you should look into.
Once a property goes into a distressed status, which means the homeowner or borrower has not paid the mortgage, the beneficiary will go on to figure out the property’s equity. The way they do this is by obtaining a Broker's Price Opinion (BPO) or ordering an appraisal.
Based on the equity amount, the bank will decide if there will be a short sale based on the homeowner’s request. If there is not short sale, the beneficiary will go on with the foreclosure. To become a REO property, the property will have had to of gone through an auction and short sale without a bid or purchase.
When the bank buys a foreclosed property from a public foreclosure auction, the property reverts back to them which will also make it a REO property that anyone can buy.
After the property has been classified as REO, the beneficiary will either need to go about selling the property on its own or with help from a REO Asset Manager. The beneficiary should take off the liens and debts on the property so it is able to be sold to the public either through future auctions, direct marketing through a real estate broker, or by itself.
The majority of the time, REO properties are not in the best possible condition to be sold in. they need maintenance and repairs to follow upkeep laws and to preserve and prepare the property for sale. This is normally in the hands of the mortgage servicer and is taken care of by a specialized property preservation company. They will do things to the property like secure it, pick up debris, maintenance the property, and rehabilitate it.
There are a few ways that you are able to buy a property in a REO or foreclosure state.
- Investors or homebuyers can purchase it in the first stage of default before auction.
- At a public foreclosure auction, investors can purchase a property.
- If there is no bid and the bank takes the property, the property can be bought from the bank or lending institution.
Many people invest in REO properties for many different reasons. They might like the property’s style or character and want to fix it up in a rehab product. There are four main reasons that the majority of people look at.
- You will have to deal with homeowners. The bank has already purchased the property so anybody that was involved in the home or property should be out of your way. Because of this, you will not have to worry about hard negotiations. The bank has no emotional attachment to the property and is probably ready to get rid of it altogether.
- You also will not have to worry about outstanding taxes. If the previous owner of the property failed to pay their property taxes, it does not fall on you. The bank should waive these fees. If you want to be safe about your decision, you can always do a title search on the property.
- If you buy the property at auction you will not have the opportunity to walk through and have an inspection which can hurt you in the long run. With a bank-owned REO property, you will be able to walk through the property and have an inspection before you buy so you know what you are getting into or out of.
- You get a discounted price on REO properties. Although you aren’t getting the best price after all the upkeep on your part, you are still paying less than you would on a new home at market value. These REO properties are under market value.
When you go into a REO deal, it’s important to have a professional and experienced realtor especially when it comes to negotiating. What you might thing is an amazing price and a steal, we might find is not. Investing in a REO property overall has a lot of benefits and is less than a new home on the market and you can make it yours.