Purchasing REO property or a foreclosure in San Diego?
Just as with any home purchase, your smartest move is to hire a professional real estate agent.
For more information, you can contact me through my site or e-mail me. I'm happy to address questions you have about real estate foreclosures.
What is an REO?
"REO" is short for Real Estate Owned. These are properties which have completed the foreclosure process that the bank or mortgage company now possesses. This is not the same as a property up for foreclosure auction.
If you buy a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees added during the foreclosure process. You must also be able to pay with cash in hand. To top everything off, you'll accept the property entirely as is. That possibly could comprise of existing liens and even current denizens that may require removal.
A bank-owned property, on the other hand, is a much cleaner and attractive transaction. The REO property did not find a buyer during foreclosure auction. Now the lender owns it. The lender will attend to the removal of tax liens, evict occupants if needed and generally arrange for the issuance of a title insurance policy to the buyer at closing.
Note that REOs may be exempt from normal disclosure requirements.
For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement,
a document that usually requires sellers to tell you about any defects of which they are knowledgeable.
By hiring Apple Dream Homes, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Am I guaranteed a low price when buying a bank owned property in San Diego?
It is sometimes presumed that any foreclosure must be a good deal and a chance for guaranteed profit. This isn't necessarily the case. You have to be very careful about buying a repossession if your intent is profit from the sale. Even though the bank is typically eager to offload it promptly, they are also motivated to minimize any losses.
When contemplating what to pay for a foreclosure, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale.
It is possible to find REOs with money-making potential, and many people do very well flipping foreclosures. However there are also many REOs that are not good buys and may lose money.
Time to make an offer?
Most banks have a department dedicated to REO that you'll work with when buying REO property from them. Commonly the REO department will use a listing agent to get their REO properties listed on the local MLS.
Prior to making your offer, you'll want to contact either the listing agent or REO department at the bank and discover as much as you can about their knowledge regarding the condition of the property and what their process is for receiving offers. Since banks typically sell REO properties "as is", you'll want to be sure and include an inspection contingency in your offer that gives you time to check for unseen damage and cancel the offer if you find it.
If, as a buyer, you can provide documentation showing your ability to secure financing, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This is generally true for any real estate offer.)
Once you've submitted your offer, you can expect the bank to make a counter offer. At this point it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer.
Realize, you'll be dealing with a process that generally involves several people at the bank, and they don't work evenings or weekends. It's not unusual for the process of offers and counter offers to take days or even weeks.
Apple Dream Homes 12526 High Bluff Dr. Suite#300 San Diego, CA 92130
When contemplating what to pay for a foreclosure, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale.
It is possible to find REOs with money-making potential, and many people do very well flipping foreclosures. However there are also many REOs that are not good buys and may lose money.
