commit ac8da176b7a9bd876bc5bdc7c13281701d79ea21 Author: jodif66726913 Date: Mon Jun 16 05:40:16 2025 +0800 Add Your Guide to REO Properties In Alabama diff --git a/Your-Guide-to-REO-Properties-In-Alabama.md b/Your-Guide-to-REO-Properties-In-Alabama.md new file mode 100644 index 0000000..4cd10af --- /dev/null +++ b/Your-Guide-to-REO-Properties-In-Alabama.md @@ -0,0 +1,40 @@ +
After a moratorium on foreclosures due to the Covid-19 pandemic, foreclosures are now increasing. As a result, we can expect to see an increase in the number of [REO residential](https://avitotanger.com) or commercial properties available on the marketplace in the coming months.
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Whether you're a relatively new real estate agent or one who's remained in the company for a while, you most likely could utilize a refresher on these bank-owned homes.
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Our resident REO expert, Jeff Underwood, shares what real estate agents require to learn about REO residential or commercial properties in Alabama.
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What is an REO residential or commercial property?
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Put simply, an REO residential or commercial property is realty that is owned by a bank or lender after failing to cost a foreclosure auction. But to genuinely understand REO residential or commercial properties, you initially require to understand the foreclosure procedure.
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The Foreclosure Process
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When an [individual](https://cubicbricks.com) with a mortgage stops making payments on that mortgage for any reason, the foreclosure procedure will start. The mortgage agreement will consist of [language](https://vision-constructors.com) about when the bank can begin this procedure. Typically, a loan provider will not begin the foreclosure process up until the debtor has actually missed four consecutive payments.
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Not all residential or commercial properties that go into the foreclosure procedure are in fact foreclosed upon. Jeff Underwood, managing attorney at South Oak Title & Closing in Auburn, states, "In a lot of cases, the mortgage is reinstated or the lending institution will exercise loss mitigation alternatives to avoid foreclosure. A debtor who files for Chapter 13 bankruptcy will likewise halt the foreclosure procedure."
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This procedure looks different in every state. Underwood discusses, "Alabama is a nonjudicial state. This suggests that the bank does not have to file a claim against the defaulted mortgagor to foreclose. Instead, the bank sends out a series of notifications that informs the mortgagor that they are in default and offers info about reinstatement. Failure to do so will result in a foreclosure sale." Other states, such as Florida, need loan providers to file a claim against the mortgagor in state court to foreclose.
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In Alabama, notices about the upcoming foreclosure sale are also published in the county newspaper for three weeks. If the bank or loan provider is the high-bidder or just purchaser at the foreclosure sale, this residential or commercial property becomes "property owned", or an REO residential or commercial property.
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Selling an REO residential or commercial property
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Jeff Underwood states, "Lenders aren't in business of retaining these residential or commercial properties. Their objective is to sell the home and recoup their losses from the foreclosure. After the foreclosure sale, the residential or commercial property will go on the market as an REO residential or commercial property." The loan provider sends out a recommendation for this residential or commercial property to both a property brokerage and a title business.
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Listing Process for REO residential or commercial properties
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Listing an REO residential or commercial property for sale is very comparable to any other residential or commercial property, with a few crucial differences. There's still a check in the lawn, a listing on the MLS, and photos of the residential or commercial property. The broker's objective is to find a purchaser for the residential or commercial property. But instead of a specific client, the broker represents a lending institution. On the MLS, this residential or commercial property will be designated as bank-owned.
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Underwood states, "These residential or commercial properties may not look like a common home that's market-ready. We had one REO residential or commercial property where the previous owner took whatever out of the home, including sinks and banisters. The bank will hire a company to tidy things up and ensure things are working, but purchasers will not discover a staged, upgraded home."
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Lenders desire to sell REO residential or commercial properties for fair market value as rapidly as possible, so pricing is determined by getting a BPO, or broker rate viewpoint. Two real estate agents will provide their opinion on the marketplace price of the residential or commercial property, and after that these opinions are balanced to obtain the sticker price. If the residential or commercial property languishes on the marketplace, the bank will start dropping the cost in incremental percentages to discover a purchaser.
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Title Process for REO residential or commercial properties
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When the title company receives the referral for an REO residential or commercial property, they will initiate a title search, simply as they would for any other residential or commercial property. "We do this before the residential or commercial property is listed for sale, and just like any title search and test, we're trying to find any potential problems so that we can provide a clear title to the buyer," Underwood explains.
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If the title is clear, this file is prepared for when the residential or commercial property goes under contract. If there are issues that need to be addressed such as judgments, encumbrances, or liens, the title business will clear the title so that it's ready for a future buyer. Once the residential or commercial property goes under agreement, all that's needed is an update to title.
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Common Title Issues with REO Properties
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Several typical title concerns can emerge with REO residential or commercial properties. Tax redemption problems are particularly common. In Alabama, taxes are paid in defaults. If they're not paid by December 31, they undergo charges and interest. If taxes are still overdue by April, the county will have a tax sale in May. Most of the times, the county is the high bidder. But in other cases, a 3rd party will buy the tax certificate.
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[Underwood](https://deshvdesh.com) says, "If the county owns the tax certificate, resolving this is a quite simple procedure. But if it's owned by a 3rd party, it can get complicated." To redeem from a private, a bank is needed to pay the delinquent taxes, penalty, interest, along with the value of any improvements on the residential or commercial property. In some circumstances, there can be a prolonged settlement process to eliminate this tax lien.
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[Encroachment](https://luxuryproperties.in) issues are also common with REO residential or commercial properties. Residential or commercial property lines aren't constantly clearly marked, which is why surveys are a needed part of the title search and examination. Underwood explains, "An advancement is any structure that exists on a next-door neighbor's land or residential or commercial property - a fence, a shed, a mobile home, or perhaps part of a home or barn." It can be complicated to clear these concerns and in many cases, a quitclaim deed may be needed.
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And as with any other residential or commercial property, we can discover any number of other title issues. Missing deeds, deeds in the back chain of title that do not have marital status, and other encumbrances can also be discovered throughout the title search and test. Title companies experienced with REO residential or commercial properties understand exactly which concerns to look for and how to resolve them to present REO buyers with a clear title.
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Owner's title insurance safeguards homebuyers from covert threats to their title after purchase. An improved owner's policy may be [advised](https://renthouz.my) for people who acquire an REO residential or commercial property. But despite the policy, REO residential or commercial property buyers need to always know laws concerning the right of redemption.
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Right of Redemption Laws
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Individuals, including the foreclosed debtor or successors of the debtor, can redeem or redeem a foreclosed residential or commercial property for up to a year after the foreclosure sale. Underwood explains, "To redeem a foreclosed residential or commercial property, the redeeming party needs to pay the quantity of the foreclosure quote, interest, and other charges consisting of taxes, insurance, and repair work."
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"Because foreclosure sales can happen relatively quickly in Alabama, the redemption duration is longer than in a lot of states. For mortgages stemmed before 2016, that redemption duration is a year. For mortgages stemmed after January 1, 2016, the redemption period is reduced to 180 days."
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He continues, "Redemptions of foreclosed homes are very unusual, however anybody acquiring an REO residential or commercial property requires to deal with an attorney who knows and understands the law." These laws vary from state to state and can alter, so constantly consult your closing lawyer with particular questions about the right of redemption.
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Buyers acquiring an REO residential or commercial property before the redemption period expires requirement to be conscious that owner's title insurance coverage will never supply affirmative coverage over the right of redemption. For cash purchasers, this will be noted as an [exception](https://www.masercondosales.com) in Schedule B-2 of the owner's title insurance policy for the duration of the redemption period.
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Lenders supplying financing for REO purchases will typically need affirmative protection for the staying redemption period. Options, such as a bond, exist if the loan amount is up to 30% higher than the foreclosure bid, however purchasers should understand that affirmative coverage for the staying redemption period just protects the lender.
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The Future of REO Properties
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Due to the pandemic, a moratorium on foreclosures remained in place up until November 2021. As this moratorium has actually raised, lending institutions have carried out loss mitigation procedures to keep people in their mortgages and assist them keep their residential or commercial properties. However, if loss mitigation strategies are not successful, the foreclosure process starts.
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Underwood says, "Foreclosure starts are up 39% over the last quarter, and we're anticipating to see a boost in these as the year advances. Starting in the 3rd quarter of this year, we'll start to see a higher-than-normal portion of REO residential or commercial properties on the market. It won't resemble it was in 2008, but it will certainly be more than what we're used to seeing."
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There's no need for real estate agents to be intimidated by REO residential or [commercial](https://leasingangels.net) properties. As more of these residential or commercial properties appear in the MLS, real estate agents who understand the subtlety of purchasing a bank-owned home are better geared up to serve their clients.
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At South Oak Title and Closing, we like partnering with real estate agents to assist them better serve their customers. Whether you have specific concerns about working with REO residential or commercial properties or simply require an REO specialist in your corner, we're here for you. Contact us with your questions today.
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Jeff Underwood
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Jeff is a Birmingham native and graduate of the Birmingham School of Law. He has actually spent decades dealing with banks, lenders, and [REO residential](https://areafada.com) or commercial properties through his time leading the REO division at a Birmingham law practice. Jeff is married and has two children: one recent graduate and one [existing student](https://costaricafsbo.com) at Auburn University.
[bloglines.com](https://www.bloglines.com/living/impact-technology-future-real-estate-industry?ad=dirN&qo=serpIndex&o=740010&origq=real+estate) +
Jeff Underwood is the Managing Attorney at South Oak Title & Closing in Auburn.
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This short article is planned to offer basic info about REO residential or commercial properties in Alabama and should not be thought about legal advice. Laws worrying REO residential or commercial properties likewise vary from one state to another. Please consult your [local lawyer](https://www.rumahq.id) with questions.
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