Are You Considering an REO Property?

REO, Wheaton real estate attorneysIf you have shared with friends and family members that you are in the market for a new home, there is a good chance that someone has at least suggested that you look into buying a foreclosure property. In this context, a foreclosure property is a home that is being sold at auction by a bank because the owner of the property could not keep up with his or her mortgage payments. At a foreclosure auction, there is the possibility of getting a fantastic deal, but not all foreclosure auctions are successful. When foreclosure auction does not result in the sale of the foreclosure property, the property remains under the ownership of the lender and becomes a real-estate owned property or REO.

Understanding a Foreclosure Auction

When a home is seized by the lender during foreclosure, the home is typically put up for sale in public auction. As such, the property will be sold to the highest bidder. However, in many foreclosure auctions, the bidders are not given the chance to walk through or inspect the home before making their bids. In most cases, the highest bidder will also be expected to pay cash for the property immediately following the auction. The combination of these factors makes buying a foreclosure property at auction a rather risky proposition. It is also why some foreclosure auctions do not result in the sale of the property.

An unsuccessful foreclosure auction leaves the lender with a home that has already caused the lender to lose money due to the defaulted mortgage loan. Now that the property is considered REO, however, there may be benefits for you as the potential buyer.

REO Sale Basics

While a foreclosure sale is typically a singular event that takes the form of an auction, an REO sale is very much like any other residential real estate deal. The lender will usually list the property and get real estate brokers involved to facilitate the sale. Prospective buyers will also get the chance to inspect the home and arrange private financing without the pressure of bidding in an auction.

You should remember, however, that most REO properties will be sold “as-is.” This means that while inspections can and certainly should be done, the lender is not likely to cover the cost of any repairs. Your broker and your lawyer could try to negotiate with the lender regarding the price of the property if substantial repairs are required, but there is no guarantee that that lender will move on the listed price. With this in mind, you will almost certainly want to include a contingency provision in your offer that allows you to back out if the property needs more work or repairs that you are willing to pay for or do yourself.

It is also important to ensure that a title search is conducted on any REO property that you are considering buying. The home could have liens or other encumbrances on it that might become your problem once the transaction is finalized.

Contact a DuPage County Real Estate Lawyer

If you are thinking about buying a real-estate owned property or a foreclosure property, you could get a good deal, but there are many potential pitfalls. Contact an experienced Wheaton residential real estate attorney to ensure that your best interests are protected at every stage of the home-buying process. Call 630-665-2500 for a confidential consultation at Stock, Carlson, Oldfield & McGrath LLC today.

Sources:

https://www.thebalance.com/buying-post-foreclosures-reos-1798183

https://www.realtor.com/advice/buy/guide-reo-properties/

What You Should Know About Selling Your Marital Home During a Divorce

divorce, DuPage County real estate attorneyFor a dedicated real estate broker, there are few things that as satisfying as helping a client buy a new home or to sell a home at a substantial profit. In many situations, the same broker can help a client with both deals at the same time—selling their current home while buying a bigger and better home for the future. At some point, however, most real estate professionals will eventually find themselves caught in the middle of a contentious divorce—one where the couple is being forced by the circumstances to sell their marital home. To manage such a situation, many real estate agents have developed strategies to help them thrive in what has become known as the “divorce niche” of real estate.

Be Very Patient

If you are going through a divorce, you want the proceedings to move as fast as possible without compromising your best interests. The same holds true for a real estate broker who is trying to help you sell your family home. Selling a house is difficult under the best of circumstances, and the added complications of the divorce can slow things down even more. Your agent might need to get approvals from both you and your soon-to-be ex-spouse, which is often very challenging if the divorce has turned bitter. Therefore, you and your broker will need to be extremely patient as you work on selling your home.

Keeping the Divorce Talk to a Minimum

While your divorce may be the only reason that you are selling your home, your potential buyers do not need to know that. In fact, many agents say that it is a good idea to avoid mentioning your divorce to prospective buyers altogether. If you tell a buyer that you are only selling because of a divorce, it may create the impression that you are desperate to make a deal. In turn, this could lead to lower bids and increased demands from buyers looking to capitalize on a perceived opportunity.

Your agent might also do some things around the house to address evidence of a pending divorce. For example, he or she may rearrange your bedroom furniture or the contents of your closets to make it less obvious that your spouse moved out recently.

Creating Loyalty

A real estate broker who can adeptly handle the sale of a home during a divorce will usually be well-positioned to help you and your spouses as you move forward. There is a good chance that both of you will soon be looking for a new place to live. If your agent was honest, communicative, and easy to work with, you might be inclined to work with him or her again in the future. Your broker could also benefit from you sharing your positive experiences with your friends and family.

A Wheaton Real Estate Lawyer Can Help Too

There is little question that a qualified real estate broker can be a tremendous source of guidance when you are looking to sell your home during your divorce. However, there are many legal concerns that must be dealt with, as well. A real estate agent is not trained or permitted to offer legal advice, which means that you should contact an experienced DuPage County real estate attorney. By adding a legal professional to your sales team, you can ensure that all important aspects of the deal have been addressed. Call Stock, Carlson, Oldfield & McGrath LLC at 630-665-2500 to schedule a confidential consultation.

Sources:

https://realestate.usnews.com/real-estate/articles/real-estate-mistakes-you-dont-want-to-make-in-a-divorce

https://www.npr.org/2011/01/20/133026583/for-sale-by-divorce-a-real-estate-niche

Property Valuations in Commercial Real Estate Deals

commercial real estate, Wheaton real estate attorneysIf you have decided to acquire any type of commercial property, it is important to be sure that the price you will pay is a fair one. Commercial real estate transactions typically involve the exchange of large amounts of money, which makes a proper valuation critical. In fact, a valuation is generally a requirement for real estate deals that are backed by lender financing.

Understanding Appraisals

A commercial property valuation is accomplished by means of an appraisal that is conducted by an approved appraiser. In order to be qualified as an appraiser, an individuals must undergo specialized education or training, and, in most cases, be certified by a professional organization of appraisers. A real estate broker is not considered to be a qualified appraiser—unless, of course, he or she has completed the necessary certification and training. Therefore, if the broker sets the initial sale price of the property, it is not necessarily backed by a qualified appraisal.

A qualified appraiser may choose from three methods of establishing a property’s value. The most appropriate method will depend on the type of property and how the property will be used in the future. An appraiser may utilize the:

  • Income capitalization method: This approach is most often used to evaluate properties that produce income, such as rental residential and commercial rental properties and shopping centers. The income capitalization method focuses on the property’s potential to generate revenue and the expected rate of return for the investor. Factors such as the condition of the property or its location are not given significant weight;
  • Sales and market comparison method: This method is commonly utilized to establish a value for single-family residential properties, but it can have commercial property applications as well. Under this approach, the appraiser will compare the recent sale prices of similar properties while taking into account the health of the local real estate market. A property sold during a boom, for example, will not be a good comparison if the market is currently slowed or depressed.
  • Cost method: The cost method takes into account the property’s value, including any improvements and the land itself and subtracts any depreciation that may have occurred. The goal is to determine if the buyer  would be better off buying the property or building a new, similar property.

In addition to being a requirement for a bank-financed transaction, appraisals are often needed for commercial real estate disputes. If the dispute reaches the courtroom, multiple appraisals may be conducted and it will be up the court to determine which value will be used in deciding the outcome of the dispute.

Call a Wheaton Real Estate Lawyer

If you are in a situation where you need a commercial property appraisal, the experienced DuPage County real estate attorneys at Stock, Carlson, Oldfield & McGrath LLC can help. We work with a network of trusted appraisers, and we will assist you in obtaining an accurate valuation of the property in question. Call 630-665-2500 for a confidential consultation today.

Sources:

https://www.investopedia.com/articles/realestate/12/real-estate-valuation.asp

https://homeguides.sfgate.com/three-methods-appraising-commercial-real-estate-value-1567.html