Yorkville REO Transaction Attorney

Kendall County Lawyer for Buying a Bank-Owned Property

If you are trying to find a new home at a good price, you might have family and friends advising you to purchase a foreclosure property. In theory, this is not a bad idea. A home that is for sale because the current owner defaulted on their mortgage could sell for far below market value. In recent years, fewer foreclosures have occurred, thanks largely to moratoriums put in place during the COVID-19 pandemic that prohibited foreclosures on federally insured mortgages. Some private lenders also limited foreclosures during the pandemic. Because of these practices, fewer foreclosure properties have been available. However, this may change as the United States comes out of the pandemic, and other options may also be available for homebuyers.

One other option for finding a good value as a homebuyer involves purchasing a "real estate owned" home, which is more commonly known as an REO property. These types of transactions may involve some unique and complex factors, but the team at Gateville Law Firm is equipped to help you complete such a transaction. Our real estate attorney can help you understand your rights as a buyer, and we will ensure that you avoid potential pitfalls during an REO transaction.

Understanding REO Properties

When a homeowner defaults on their mortgage, the lender or the current holder of the mortgage loan will proceed with the foreclosure process. After the owner is evicted and the lender seizes the home, it will be placed up for public auction. In foreclosure auctions, potential buyers will generally be unable to view or inspect the property, and the winner of the auction will usually be required to make a cash payment to purchase the home. Because of these issues, there are many cases in which a home may not be sold at an auction, and the lender will continue to own the property. At this point, the home is considered to be "real estate owned" (REO).

Buying an REO Property

If a lender is unable to sell a property through a foreclosure auction, they may place the home on the market, and they will often be looking to sell the property as quickly as possible in order to recoup the losses experienced because of the foreclosure. An REO transaction is handled in much the same way as a standard real estate sale. The lender may use a real estate agent to list the home, and prospective buyers will typically be able to view the home before deciding whether to make an offer. A buyer may make an offer on the home, negotiate a purchase agreement, and have the home inspected during the closing process.

Most REO properties are sold "as is," which means that any repairs that need to be done will usually be the buyer's responsibility. The lender is unlikely to arrange for the repairs or to drop the price to account for these issues. Therefore, it is advisable for a buyer to include a contingency clause in their purchase contract that will give them the option to cancel the transaction if the home inspection reveals that the costs of repair will be too high.

Benefits of Buying an REO Property

As the state of Illinois and the rest of the country have established a "new normal" following the COVID-19 health crisis, the real estate market has been flooded with people looking to buy new homes. Because of the large number of buyers and a limited number of homes available to purchase, a "seller's market" has resulted in higher prices, and buyers may be unable to negotiate favorable terms during transactions.

A seller's market gives lenders the incentive to list and sell REO properties. Because these properties are typically priced lower than other comparable homes, buyers may be able to realize significant savings. However, it is still important to work with a real estate attorney in these transactions to ensure that a buyer's rights and interests will be protected. A skilled and experienced lawyer can help negotiate favorable terms, address issues that may arise during the closing process, and ensure that ownership of the property can be transferred correctly following the completion of the transaction.

Call a Kendall County Real Estate Lawyer for REO Properties

While a real estate owned home can provide savings for buyers in some cases, the process of buying an REO property can be complex. Gateville Law Firm can provide guidance and legal representation for buyers in these situations, ensuring that they will be able to complete REO transactions successfully. Contact our office at 630-780-1034 to get the help you need. We offer free consultations, and we serve clients in Yorkville, Oswego, Kendall County, and throughout Northern Illinois.