Purchasing REO property or a foreclosure in the San Fernando Valley?
Savvy consumers will turn to a seasoned pro when considering the purchase of a foreclosed property. For more information, simply contact me through my site or e-mail me. I'm happy to address any questions you have regarding real estate foreclosures.
What's an REO?
"REO" or Real Estate Owned are homes which have been foreclosed upon that the bank or mortgage company now holds. This is different than 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 accrued during the foreclosure process. The buyer must also be willing to pay with cash in hand. To top everything off, you'll accept the property entirely as is. That might consist of current liens and even current occupants that may require eviction.
A bank-owned property, on the other hand, is a much cleaner and attractive transaction. The REO property was unable to find a buyer during foreclosure auction. The lender now owns it. The bank 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.
Note that REOs may be exempt from standard disclosure requirements. For instance, in California, banks do not have to give a Transfer Disclosure Statement, a document that typically requires sellers to tell you about any defects of which they are informed. By hiring Fred Calloway Real Estate - KW Realty, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Am I assured a low price when purchasing an REO property in Granada Hills?
It's frequently presumed 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 a profit. While it's true that the bank is typically eager to sell it quickly, they are also looking to get as much as they can for it.
When considering 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. 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 lose money.
Prepared to make an offer?
Most banks have staff 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 use a listing agent.
Before 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 concerning the condition of the property and what their process is for getting offers. Since banks typically sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for hidden damage and terminate the offer if you find it. If, as a buyer, you can provide documentation demonstrating your ability to pay, 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 type of real estate offer.)
Once you've made your offer, you can expect the bank to respond with a counter offer. Then it will be your choice whether to accept their counter, or make another counter offer. Be aware, you'll be dealing with a process that probably involves multiple 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.
Fred Calloway Real Estate - KW Realty 16842 Devonshire St. Granada Hills, CA 91344
When considering 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. 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 lose money.
