Purchasing REO property or a foreclosure in the South Bay?


	Just as with any home purchase, your wisest move is to hire a professional real estate agent.

What is an REO?

"REO" or Real Estate Owned are properties which have been through foreclosure that the bank or mortgage company currently possesses. This is different than a property up for foreclosure auction. RE/MAX PV Realty has experience to share with foreclosures and bank owned properties in the South Bay, California

RE/MAX PV Realty has experience to share with foreclosures and bank owned properties in the South Bay, California

If you buy a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees added during the foreclosure process. You must also be able to pay with cash in hand. And on top of all that, you'll receive the property 100% as is. That could consist of prevailing liens and even current residents that need to be removed.

A bank-owned property, on the contrary, is a much cleaner and attractive option. The REO property did not find a buyer during foreclosure auction. Now the lender owns it. The lender will deal with the elimination of tax liens, evict occupants if needed and generally plan for the issuance of a title insurance policy to the buyer at closing.

Note that REOs may be exempt from typical disclosure requirements. For example, in Nevada, it is optional for foreclosures to have a Property Disclosure Statement, a document that typically requires sellers to disclose any defects of which they are informed. By hiring RE/MAX PV Realty, you can rest assured knowing all parties are fulfilling California state disclosure requirements.

Are REO properties a bargain in the South Bay?

It is sometimes thought that any REO must be a good buy and a chance for easy money. This isn't necessarily the case. You have to be very careful about buying a REO if your intent is make money. Even though the bank is usually anxious to sell it soon, they are also motivated to get as much as they can for it.

RE/MAX PV Realty has experience to share with foreclosures and bank owned properties in the South Bay, California

When pondering 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. It is possible to find REOs with money-making potential, and many people do very well buying foreclosures. Still 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 in buying REO property from them. Typically 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 learn as much as you can about what they know concerning the condition of the property and what their process is for taking offers. Since banks most commonly sell REO properties "as is", you may want to include an inspection contingency in your offer that gives you time to check for hidden damage and withdraw the offer if you find it. As with making any offer on real estate, your offer may be more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.

Once you've submitted your offer, it's customary for the bank to counter offer. Then it will be your decision whether to accept their counter, or make another counter offer. Realize, you'll be dealing with a process that probably involves several people at the bank, and they don't work evenings or weekends. It's typical for the process of offers and counter offers to take days or even weeks.