Looking for REO property or a foreclosure on the Monterey Peninsula/Salinas?
|Foreclosed upon and bank owned property purchases require the assistance of an experience professional. For more information, you can contact me through my site or e-mail me. I'm happy to answer questions you have regarding real estate foreclosures.|
What's an REO?"REO" is short for Real Estate Owned. These are houses which have been through foreclosure that the bank or mortgage company currently holds. 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 accrued during the foreclosure process. The buyer must also be willing to pay with cash in hand. To top everything off, you'll receive the property 100% as is. That could include existing liens and even current residents that need to be removed.
A bank-owned property, on the other hand, is a much neater and attractive transaction. The REO property was unable to find a buyer during foreclosure auction. Now the bank owns it. The bank will see 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 typical disclosure requirements. For instance, in California, banks are not required to give a Transfer Disclosure Statement, a document that normally requires sellers to reveal any defects they are informed of. By hiring Bayshore Real Estate Services, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Am I guaranteed a low price when purchasing an REO property on the Monterey Peninsula or Salinas?It's sometimes thought that any foreclosure must be a good deal and an opportunity for guaranteed profit. This simply isn't true. You have to be prudent about buying a REO if your intent is to make money. While it's true that the bank is usually anxious to offload it fast, they are also motivated to minimize any losses.
When pondering the value of 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 flipping foreclosures. However, there are also many REOs that are not good buys and may lose money.
All set to make an offer?Most lenders have a department dedicated to REO that we will be working with in buying REO property from them. The person that handles the contract is called an "Asset Manager". Most banks will use a listing agent to market their properties on the MLS.
Prior to making your offer, I will work with the listing agent and use numerous other resources to get you as much information as possible about the property prior to making your offer. Since banks almost always 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 unknown damage and cancel the offer if you find it. Most REO departments and asset managers require both a pre-approval letter and verification of the source of your down payment funds to be prepared to provide this information (Pre-approval letters are generally required by sellers to accompany your real estate offer.)
Once you've presented your offer, you can expect the bank to counter offer or at a minimum send you a "Bank Addendum" which will likely include changes to your offer because of the lender's policies and procedures. I will explain these changes, both the benefits and risks to you thoroughly prior to your deciding whether to continue pursuing the property. At this point it will be your choice whether to accept their counter, or make another counter offer (un-common for asset managers to accept but possible) or move on to another home. Since offers and counter offers usually allow a day or more for the other party to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer. However, recently banks may only give you hours to make a decision because of the recent trend of multiple offers and lack of inventory. I will be there to guide you through the process and ensure the deadlines are met!