Purchasing REO property or a foreclosure in Walnut Creek?
Just as with any property purchase, your smartest move is to hire a professional real estate agent.
For more information, you can contact me through my site or e-mail me. I'm happy to address any questions you have regarding real estate foreclosures.
What is an REO?
"REO" means Real Estate Owned. These are homes which have been through foreclosure and are presently held by the bank or mortgage company. This is different than 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 accumulated during the foreclosure process. The buyer must also be ready to pay with cash in hand. To top everything off, you'll get the property 100% as is. That could comprise of standing liens and even current denizens that may require eviction.
A bank-owned property, by contrast, is a much neater and attractive proposition. The REO property did not find a buyer during foreclosure auction. The bank now owns it. The lender will take care of 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.
Do be aware that REOs may be exempt from normal disclosure requirements.
For instance, in California, banks are exempt from giving a Transfer Disclosure Statement,
a document that ordinarily requires sellers to make known any defects of which they are informed.
By hiring St.George Realty, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Is REO property in Walnut Creek a bargain?
It's commonly assumed that any foreclosure must be a good deal and an opportunity for easy money. This isn't necessarily the case. You have to be very careful about buying a repossession if your intent is make a profit. Even though the bank is usually eager to offload it quickly, they are also motivated to get as much as they can for it.
When pondering the value of 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 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 mortgage companies have staff dedicated to REO that you'll work with while 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 discover 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 typically 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 retract 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, it's customary for the bank to make a counter offer. Then it will be your choice whether to accept their counter, or submit another counter offer.
Your transaction could be settled in one day, but that's usually not the case. 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. St.George Realty is accustomed to these situations and will work to ensure there are no undue delays.
When pondering the value of 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 foreclosures. However there are also many REOs that are not good buys and not likely to turn a profit.
