Looking for REO property or a foreclosure in San Diego?
Just as with any property purchase, your wisest move is to hire a professional real estate agent.
What is an REO?
"REO" or Real Estate Owned are houses which have gone through foreclosure and are presently owned by the bank or mortgage company. This is not the same as real estate up for foreclosure auction.
When buying a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees amassed during the foreclosure process. The buyer must also be willing to pay with cash in hand. And on top of all that, you'll get the property entirely as is. That could comprise of current liens and even current residents that need to be put out.
A bank-owned property, by contrast, is a much neater and attractive proposition. The REO property didn't find a buyer during foreclosure auction. Now the bank owns it. The lender will take care of the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.
You should be aware that REOs may be exempt from normal disclosure requirements.
In California, for example, banks are exempt from giving a Transfer Disclosure Statement,
a document that typically requires sellers to disclose any defects of which they are knowledgeable.
By hiring RC Realty, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Are REO properties a bargain in San Diego?
It's occasionally thought that any REO must be a good buy 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 profit from the sale. While it's true that the bank is often eager to sell it promptly, they are also looking to get as much as they can for it.
When considering what to pay for REO property, carefully analyze 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 foreclosures. However, there are also many REOs that are not good buys and not likely to turn a profit.
Prepared to make an offer?
Most banks have a department 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 frequently contract with a listing agent.
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 their knowledge about the condition of the property and what their process is for receiving offers. Since banks most commonly 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 terminate 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.
After you've made your offer, you can expect the bank to counter offer. Then it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer.
Realize, you'll be dealing with a process that most likely involves several people at the bank, and they don't work evenings or weekends. It's not uncommon for there to be days or even weeks of going back and forth. RC Realty is used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.