Purchasing REO property or a foreclosure in San Diego?
Savvy consumers will turn to a seasoned pro when considering a foreclosed property.
For more information, simply contact me through my site or e-mail me. I'm happy to address questions you have regarding real estate foreclosures.
What's an REO?
"REO" or Real Estate Owned are properties which have been foreclosed upon and are presently possessed by the bank or mortgage company. This is unlike 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 accumulated during the foreclosure process. You must also be willing to pay with cash in hand. Finally, you'll receive the property entirely as is. That may comprise of standing liens and even current residents that need to be removed.
A bank-owned property, by contrast, is a more tidy and attractive option. The REO property did not find a buyer during foreclosure auction. The lender now owns it. The bank will see to the removal of tax liens, evict occupants if needed and generally plan for the issuance of a title insurance policy to the buyer at closing.
Take notice that REOs may be exempt from normal disclosure requirements.
For example, in North Carolina, it is optional for foreclosures to have a Property Disclosure Statement,
a document that typically requires sellers to tell you about any defects of which they are aware.
By hiring Neely, Barrow & Associates, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Is REO property in San Diego a bargain?
It's occasionally presumed that any REO must be a good buy and an opportunity for guaranteed profit. This isn't always true. You have to be cautious about buying a REO if your intent is to make money off of it. Even though the bank is usually eager to sell it soon, they are also motivated to get as much as they can for it.
When contemplating what to pay for REO property, carefully analyze 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.
There are bargains with potential to make money, and many people do very well flipping foreclosures. However there are also many REOs that are not good buys and may not be money makers.
All set to make an offer?
Most banks 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 usually contract with 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 their knowledge regarding the condition of the property and what their process is for taking offers. Since banks almost always sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for unseen damage and withdraw the offer if you find it.
As with making any offer on real estate, you'll make your offer more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
After you've made your offer, you can expect the bank to counter offer. Then it will be your choice whether to accept their counter, or offer a counter to the counter offer.
Be aware, you'll be contending with a process that usually involves multiple people at the bank, and they don't work evenings or weekends. It's typical for there to be days or even weeks of negotiating back and forth.
Richard Neely Jr. | DRE# 01264175 | (ph) 619.750.1107 | (fax) 619.297.5368 Michael Barrow | DRE# 01419213 | (ph) 619.772.1574 | (fax) 619.255.1675 Tugg Snowbarger, Broker 6308 Caminito del Cervato, San Diego, California 92111
When contemplating what to pay for REO property, carefully analyze 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.
There are bargains with potential to make money, and many people do very well flipping foreclosures. However there are also many REOs that are not good buys and may not be money makers.
