Looking for REO property or a foreclosure in San Gabriel Valley?
Purchasing a bank-owned property is not something to be taken casually.
What's an REO?
"REO" or Real Estate Owned are properties which have been through foreclosure that the bank or mortgage company now holds. This differs from 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. You must also be willing to pay with cash in hand. And on top of all that, you'll accept the property completely as is. That possibly could comprise of current liens and even current tenants that need to be removed.
A bank-owned property, on the other hand, is a much neater and attractive deal. The REO property did not find a buyer during foreclosure auction. Now the bank owns it. The bank will see to the elimination of tax liens, evict occupants if needed and generally prepare 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 North Carolina, it is optional for foreclosures to have a Property Disclosure Statement,
a document that typically requires sellers to make known any defects of which they are informed.
By hiring BrokerInTrust Real Estate, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Is REO property in San Gabriel Valley a bargain?
It's occasionally thought that any REO must be a steal and an opportunity for guaranteed profit. This frequently isn't true. You have to be very careful about buying a repossession if your intent is to make money. While it's true that the bank is usually eager to sell it promptly, they are also looking to minimize any losses.
Look closely at the listing and sales prices of similar homes in the neighborhood when considering the purchase of an REO. And factor in any repairs or upgrades 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 flipping foreclosures. Still, there are also many REOs that are not good buys and may not be money makers.
Ready to make an offer?
Most lenders have a department 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 typically contract with a listing agent.
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 regarding the condition of the property and what their process is for taking offers. Since banks almost always sell REO properties "as is", you may want to include an inspection contingency in your offer that gives you time to check for unseen damage and cancel the offer if you find it.
If, as a buyer, you can provide documentation showing your ability to secure financing, 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.)
Once you've made your offer, it's customary for the bank to make a counter offer. From there it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer.
Your deal might be final in a single day, but that's rare. 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.