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Interested in REO property or a foreclosure in Chula Vista?
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Smart consumers will turn to a seasoned pro when considering the purchase of a foreclosed property.
Should you have any questions regarding real estate in Chula Vista, California, call me or send me an e-mail.
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What is an REO?
"REO" stands for Real Estate Owned. These are homes which have completed the foreclosure process that the bank or mortgage company now holds. 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 accumulated during the foreclosure process. You must also be willing to pay with cash in hand. To top everything off, you'll accept the property completely as is. That could comprise of existing liens and even current tenants that may require eviction.
A bank-owned property, conversely, is a much neater and attractive transaction. The REO property didn't find a buyer during foreclosure auction. Now the bank owns it. The bank will deal with the removal of tax liens, evict occupants if needed and generally arrange 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.
For example, in California, banks do not have to give a Transfer Disclosure Statement,
a document that usually requires sellers to disclose any defects of which they are aware.
By hiring Allstar Mortgage and Real Estate, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Are REO properties a bargain in San Diego County?
It's frequently believed that any foreclosure must be a steal and an opportunity for easy money. This frequently isn't true. You have to be prudent about buying a repossession if your intent is make money. Even though the bank is often eager to offload it promptly, 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.
The bargains with money making potential exist, and many people do very well flipping foreclosures. But there are also many REOs that are not good buys and not likely to turn a profit.
Ready to make an offer?
Most banks have staff 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 usually 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 concerning the condition of the property and what their process is for accepting offers. Since banks most commonly sell REO properties "as is", you'll want to be sure and include an inspection contingency in your offer that gives you time to check for hidden 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 goes for any type of real estate offer.)
Once you've presented your offer, you can expect the bank to respond with a counter offer. At this point it will be your choice whether to accept their counter, or offer a counter to the counter offer.
Realize, you'll be contending with a process that most likely involves a group of 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 going back and forth. Allstar Mortgage and Real Estate is accustomed to these situations and will work to ensure there are no unnecessary delays.
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