Purchasing REO property or a foreclosure in the San Francisco Bay Area?
|Foreclosed upon and bank owned property purchases require the assistance of an experience professional.|
What's an REO?"REO" is an abbreviation for Real Estate Owned. These are houses which have been foreclosed upon that the bank or mortgage company presently possesses. This differs from real estate 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 amassed during the foreclosure process. You must also be ready to pay with cash in hand. And on top of all that, you'll receive the property completely as is. That could consist of standing liens and even current residents that may require removal.
A bank-owned property, by contrast, is a much cleaner and attractive proposition. The REO property did not find a buyer during foreclosure auction. The lender now owns it. The lender will see to the elimination of tax liens, evict occupants if needed and generally prepare 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 instance, in , banks are exempt from giving a Transfer Disclosure Statement, a document that normally requires sellers to disclose any defects of which they are knowledgeable. By hiring EXCEL REALTY FINE HOMES, you can rest assured knowing all parties are fulfilling state disclosure requirements.
Is REO property in the San Francisco Bay Area a bargain?It's commonly assumed that any REO must be a good buy and a chance for guaranteed profit. This often isn't true. You have to be very careful about buying a repossession if your intent is to make money off of it. Even though the bank is often anxious to sell it soon, they are also motivated to minimize any losses.
Look closely at the listing and sales prices of similar properties in the neighborhood when making an offer on an REO. And factor in any repairs or upgrades necessary to prepare the house for resale or moving in. There are bargains with potential to make money, and many people do very well buying foreclosures. But there are also many REOs that are not good buys and not likely to turn a profit.
Time to make an offer?Most mortgage companies have staff dedicated to REO that you'll work with when buying REO property from them. Normally 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 most commonly 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 unknown damage and cancel 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.
Once you've presented your offer, it's customary for the bank to counter offer. From there it will be up to you to decide whether to accept their counter, or make another counter offer. Understand, you'll be working with a process that most likely involves several people at the bank, and they don't work evenings or weekends. It's not unusual for there to be days or even weeks of going back and forth. EXCEL REALTY FINE HOMES is are used to working around the schedules of this type of seller and will do everything possible to ensure there are no unnecessary delays.