Looking for REO property or a foreclosure in Los Angeles/Orange County?
Foreclosed upon and bank owned property purchases require the assistance of an experience professional. If you have questions about real estate in Los Angeles,Orange County California, call me or send me an e-mail.
What is an REO?
"REO" means Real Estate Owned. These are homes which have been foreclosed upon that the bank or mortgage company currently owns. 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 added during the foreclosure process. The buyer must also be prepared to pay with cash in hand. Finally, you'll get the property 100% as is. That may involve current liens and even current tenants that need to be evicted.
A bank-owned property, on the other hand, is a much neater and attractive proposition. The REO property did not find a buyer during foreclosure auction. Now the bank owns it. The lender will take care of the elimination of tax liens, evict occupants if needed and generally organize for the issuance of a title insurance policy to the buyer at closing.
Take notice that REOs may be exempt from normal disclosure requirements. For example, in Nevada, it is optional for foreclosures to have a Property Disclosure Statement, a document that ordinarily requires sellers to reveal any defects they are informed of. By hiring Realty Executives Commercial/Residential, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Is REO property in Los Angeles, Orange County a bargain?
It is commonly assumed that any REO must be a good buy and a chance for easy money. This isn't necessarily true. You have to be prudent about buying a REO if your intent is make a profit. While it's true that the bank is often anxious to sell it soon, they are also motivated to minimize any losses.
When contemplating what to pay for REO property, 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 buying and selling foreclosures. However there are also many REOs that are not good buys and may not be money makers.
All set to make an offer?
Most banks have a department dedicated to REO that you'll work with when buying REO property from them. Usually the REO department will use a listing agent to get their REO properties listed on the local MLS.
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 what they know about the condition of the property and what their process is for accepting offers. Since banks usually sell REO properties "as is", you may want 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. 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. At this point 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 generally involves multiple 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 negotiating back and forth. Issac & Associates is accustomed to these situations and will work to ensure there are no unnecessary delays.
When contemplating what to pay for REO property, 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 buying and selling foreclosures. However there are also many REOs that are not good buys and may not be money makers.
