From 7c33e3302c219677fbb355d7eaa3518e94a71a96 Mon Sep 17 00:00:00 2001 From: vutelissa58002 Date: Sun, 9 Nov 2025 12:08:51 +0800 Subject: [PATCH] Update 'Buying a Bank-Owned REO home in Brand-new Jersey: Key Considerations' --- ...-Brand-new-Jersey%3A-Key-Considerations.md | 23 +++++++++++++++++++ 1 file changed, 23 insertions(+) create mode 100644 Buying-a-Bank-Owned-REO-home-in-Brand-new-Jersey%3A-Key-Considerations.md diff --git a/Buying-a-Bank-Owned-REO-home-in-Brand-new-Jersey%3A-Key-Considerations.md b/Buying-a-Bank-Owned-REO-home-in-Brand-new-Jersey%3A-Key-Considerations.md new file mode 100644 index 0000000..541514a --- /dev/null +++ b/Buying-a-Bank-Owned-REO-home-in-Brand-new-Jersey%3A-Key-Considerations.md @@ -0,0 +1,23 @@ +
Are you purchasing an REO home in New Jersey?
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The process of purchasing bank-owned residential or commercial property in New Jersey has special obstacles, consisting of purchaser handling certificate of tenancy, the residential or commercial property being strictly "as-is", and restricted appraisal and mortgage contingencies. Find out more in the video or records listed below!
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VIDEO TRANSCRIPT:
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Good morning. This is Earl White, Real Estate Attorney. This is a video about 5 things you require to understand when buying an REO bank owned residential or commercial property. This is when the bank owns the [residential](https://glorycambodia.com) or commercial property after a foreclosure has been completed. The procedure is pretty different compared to buying other kinds of residential or commercial property and other basic sales, so we'll concentrate on five huge things.
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First, the attorney review process is extremely various. Normally, in New Jersey, when it goes into attorney review, the buyer's attorney and seller's lawyer negotiate a "rider", which is basically an addendum to the contract, including in any needed modifications and some popular changes. There'll be a normal local lawyer representing the purchaser and the seller. With an REO residential or commercial property, bank owned [residential](https://grannyflat.rentals) or commercial property, the bank, the seller, is not going to have a regional lawyer. In fact, usually there won't even be an attorney assigned. There'll be some sort of possession supervisor, possibly the real estate agent will be managing it closely or another agent, however there's not going to be any attorney for a purchaser's lawyer like myself to negotiate with any unique changes to the agreement.
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There's not going to be another attorney that I might call and attempt to describe something distinct about the offer. Any unique modifications are not going to get put in throughout the lawyer review process. That also means that there's some customary defenses I would generally include throughout lawyer evaluation that I would not be able to include an REO sale, so something along the lines of appraisal contingency securities, additional securities for code infractions, things connecting to back due taxes that may be available in the future, things of these natures, extra protections I would include if I might deal with another attorney sort of like myself, they would understand.
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With an REO, there's no other lawyer and they're not going to be flexible on making any changes throughout attorney evaluation. What will occur during attorney evaluation though is that you'll sign the typical real estate agent agreement and then there'll resemble an addendum, like a bank addendum to the contract with some lovely heavy handed terms favorable to the bank. The attorney review is going to be more structured, it's more of a take it or leave it. We truly need to promote something, we can, however it's going to be more take it or leave it on the bank's terms in lawyer evaluation. That's one difference is the lawyer evaluation procedure is simply rather different and more stringent with the buyer having less space to make any changes to the preliminary contract or the bank's addendum.
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Another crucial thing to be aware of with the REO sales is that the timeframes are rigorous. Most of the sales that ... The majority of [property](https://mountisaproperty.com) sales, the due dates are flexible. They're not "time is of the essence". If an individual misses out on a due date by a day, you submit your assessment demand a day late or your mortgage dedication's a day late or you pass the closing date a week, not actually a huge deal because the contracts are [established](https://fabrealtygroupnc.com) that way.
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REO offers are not like that. The dates usually are set up to be time is of the essence. On the buy side of the offer, you often have more obligations. You got to do assessments, you do your appraisals, you get your [mortgage](https://albineproperty.com). It's more in your corner, so you [require](https://dinarproperties.ae) to make certain you're on point with all your dates and all your timeframes because there isn't going to be much versatility built into the agreement.
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REOs are likewise strictly as is sales. I understand regular sales, even in the base real estate agent agreement, paragraph 16 says, "Seller represents the sale is as is." All the sales are generally as is, but oftentimes the purchaser will make the point that, oh, we're truly going to treat this as an as is sale. We're not going to make any ask for repairs. Once you begin decreasing the sales process, buyer has an inspection, something brand-new is [discovered](https://mcmillancoastalproperties.com.au) and you still might make an ask for repair or credit or rate reduction. With the bank owned residential or commercial properties, they are genuinely rigorous as is sales.
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The bank is not going to alter the rate. They're not going to begin giving credits. To even get that, to even try to make that credit, it would be challenging because, as I pointed out, there's no attorney for me to even submit a request for a contract addendum to. It would take the bank 10 days just to even think about the demand, right? A quarter of the way to the closing it would take them to even simply consider and make a decision on this. That's how institutional it is.
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They really are rigorous as is sales, and that is also some danger for you putting time into the deal since considered that it was an REO, the previous owner got foreclosed on, they might not have been taking the finest care of the residential or commercial property because they knew they probably were going to lose it to the bank. There could be physical concerns there. I indicate most REO agreements do give you still a right to examine and you still have a right to cancel and get your deposit back. Again, the bank is going to treat it as a true as is sale and is not going to negotiate credits or repairs.
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Another big distinction with these REOs sales is that the purchaser handles the certificate of tenancy and smoke certificate. Most sales, 99, if not 99.9% of the time, seller usually has the responsibility to get the certificate of tenancy, which is when a city inspector, you call the city billing department, they send out inspector out to the residential or commercial property. They inspect for code infractions, habitability concerns, anything like that. They provide a certificate that states the residential or commercial property adhere to a zoning code or something like that.
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Normally seller duty. In the preliminary real estate agent agreement, it is by default seller responsibility. REOs is the opposite. They're going to press that onto the purchaser and there is constantly heavy handed language therein. Again, you can't truly work out these things that well. If you're going to do the REO sale, there's threats here. They're either going to shift the responsibility to the purchaser to pay for all the costs for the [certificate tenancy](https://www.pakproperty.ca) and likewise smoke certificate, which is getting carbon monoxide gas detector, fire extinguisher, smoke detector, et cetera, to the purchaser.
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Now, the threat here, and various sale, I would have defense, I might build securities for this, however not for this kind of one, I would add something like buyer is ... Say, buyers, "Okay, I'm going to handle responsibility for CO. Despite the fact that it's not normal, that's how I'm going to get my offer accepted." I would add a security like if the cost to get the CO to the purchaser is higher than 2,500 bucks, then the buyer can cancel if the seller won't kick in the difference. Right? That's not going to fly in REO, that type of protection. Right? You're going to need to handle the commitment to get the CO. If their expenses show up and they're more than 2,500, who understands what they could be, then if you do not complete the sale, you could lose your deposit. That's a risk that you take doing an REO offer.
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The other thing I'm pointing out, the key difference here is there's no appraisal contingencies. In the initial real estate agent contract, the word appraisal isn't even mentioned, right? There's no official appraisal contingency consisted of in the [real estate](http://propz24.com) agent contract, so you have to add that in lawyer evaluation. As I discussed in point one in this video, you can't really make much adjustments like utilizing attorney review riders for an REO offer. What about the appraisal?
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For the appraisal, you're not going to get an for an REO deal. What it'll boil down to regarding the appraisal is that if the residential or commercial property assesses so low that your mortgage gets rejected, then you can still cancel the deal and you can still cancel the deal upon getting a mortgage denial letter. If it's truly low, you're not on the hook to move on with the deal and comprise the cash instantly, so you do not have to make up money, but it will simply boil down to if your mortgage gets approved or not authorized.
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The reason that is not excellent because, say, you're putting 20% down, right? If it under appraises by, say, $20,000, you may still get approved for the exact same quantity of the mortgage and not get denied, but you simply would have less equity in the residential or commercial property. Instead of being a 20% down mortgage on the appraisal worth, generally under evaluated, maybe now you're authorized for the very same amount, however it's just 15% down on the appraisal value. Now due to the fact that you're not 20% down, you have to start paying PMI or worsen terms.
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Again, you're not going to get a formal appraisal contingency. You have less equity in the residential or commercial property, less terms, even worse mortgage terms. It's not a problem if you can get rejected for the mortgage, but you may not get rejected. You still might get authorized for your mortgage even though it under evaluated, in which case then you're stuck with even worse terms and no other way to get out of the deal and just sort of have to eat the lower appraisal in that scenario.
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Okay, hope this video was helpful. Let me understand in the comments any questions about REO sales, how those contracts work. If you need assistance with any genuine estate offers, feel free to reach out 201-389-8275.
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This blog applies to purchasing a an [REO bank-owned](https://marthaknowsluxury.com) home in Newark, Jersey City, Hoboken, Paterson, Elizabeth, Union City, West New York City, Bayonne, East Orange, West Orange, North Bergen, Clifton, Bloomfield, New Brunswick, Atlantic City, and throughout Bergen County, Essex County, Hudson Couny, Union County, Morris County, Somerset County, Atlantic County, Monmouth County, [Middlesex](https://dazhomes.com) County, Ocean County, and Passaic County.
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