Foreclosed upon and bank owned property purchases require the assistance of an experience professional.
What's an REO?
"REO" means Real Estate Owned. These are properties which have been foreclosed upon and are presently possessed by the bank or mortgage company. 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. You must also be ready to pay with cash in hand. Finally, you'll get the property completely as is. That may comprise of current liens and even current denizens that need to be kicked out.
A bank-owned property, on the other hand, is a much cleaner and attractive transaction. The REO property didn't 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 plan for the issuance of a title insurance policy to the buyer at closing.
Do be aware that REOs may be exempt from standard disclosure requirements.
For example, in North Carolina, it is optional for foreclosures to have a Property Disclosure Statement,
a document that ordinarily requires sellers to disclose any defects of which they are aware.
By hiring Prudential California Realty, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Is REO property in Pasadena a bargain?
It is occasionally believed that any REO must be a bargain and an opportunity for easy money. This often isn't true. You have to be very careful about buying a REO if your intent is to make money off of it. Even though the bank is typically eager to offload it soon, they are also looking to get as much as they can for it.
Look closely at the listing and sales prices of competing properties in the neighborhood when making an offer on an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in.
It is possible to find REOs with money-making potential, and many people do very well buying and selling foreclosures. But there are also many REOs that are not good buys and may lose money.
Time to make an offer?
Most lenders have staff dedicated to REO that you'll work with while 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 their knowledge about the condition of the property and what their process is for getting 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 unseen damage and retract the offer if you find it.
If, as a buyer, you can provide documentation showing your ability to pay, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This holds for any real estate offer.)
After you've submitted your offer, it's customary for the bank to respond with a counter offer. Then it will be up to you to decide whether to accept their counter, or make another counter offer.
Be aware, 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 quite common for there to be days or even weeks of negotiating back and forth.
Castle & Home Realtors 350 S. Lake Avenue #207 Pasadena, CA 91101
Look closely at the listing and sales prices of competing properties in the neighborhood when making an offer on an REO. And factor in any repairs or remodeling necessary to prepare the house for resale or moving in.
It is possible to find REOs with money-making potential, and many people do very well buying and selling foreclosures. But there are also many REOs that are not good buys and may lose money.