Looking for REO property or a Foreclosure on the Central Coast of California?
Just as with any home purchase, your wisest move is to hire a professional real estate agent.
What is an REO?
"REO" or Real Estate Owned are houses which have gone through foreclosure and are presently held by the bank or mortgage company. This is different than 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. The buyer must also be willing to pay with cash in hand. And on top of all that, you'll accept the property totally as is. That might consist of standing liens and even current residents that may require eviction.
A bank-owned property, conversely, is a much neater and attractive transaction. The REO property was unable to find a buyer during foreclosure auction. Now the lender owns it. The lender will attend to the elimination of tax liens, evict occupants if needed and generally organize for the issuance of a title insurance policy to the buyer at closing.
Do be aware that REOs may be exempt from typical disclosure requirements. For example, in Nevada, it is optional for foreclosures to have a Property Disclosure Statement, a document that normally requires sellers to make known any defects they are aware of. By hiring Keith Levine CA.DRE# 00646506 Real Estate Service, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Am I assured a low price when purchasing a bank owned property on the California Central Coast?
It is commonly assumed that any REO must be a good deal and an opportunity for easy money. This isn't always true. You have to be very careful about buying a repossession if your intent is make money. Even though the bank is typically eager to offload it soon, they are also motivated to get as much as they can for it.
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. The bargains with money making potential exist, and many people do very well buying foreclosures. But there are also many REOs that are not good buys and may lose money.
Time to make an offer?
Most lenders have a department dedicated to REO that you'll work with in buying REO property from them. To get their properties advertised on the local MLS, the lender will frequently use a listing agent.
Prior to making your offer, you'll want to contact either the listing agent or REO department at the bank and find out as much as you can about what they know about the condition of the property and what their process is for accepting offers. Since banks typically sell REO properties "as is", it may be in your best interest to include an inspection contingency in your offer that gives you time to check for hidden damage and cancel the offer if you find it. If, as a buyer, you can provide documentation proving 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.)
After you've presented your offer, it's customary for the bank to make a counter offer. Then it will be your choice whether to accept their counter, or submit another counter offer. Be aware, you'll be contending with a process that generally involves a group of people at the bank, and they don't work evenings or weekends. It's quite common for there to be days or even weeks of negotiating back and forth. Keith Levine CA.DRE# 00646506 Real Estate Service is accustomed to these situations and will work to ensure there are no undue delays.
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. The bargains with money making potential exist, and many people do very well buying foreclosures. But there are also many REOs that are not good buys and may lose money.
