Making an offer on REO property or a foreclosure in Downey?
Foreclosed upon and bank owned property purchases require the assistance of an experience professional.
If you have questions regarding real estate in Downey, California, call me
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What's an REO?
"REO" is an abbreviation for Real Estate Owned. These are homes which have been through foreclosure and are now held by the bank or mortgage company. This is not the same as 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. You must also be able to pay with cash in hand. To top everything off, you'll receive the property totally as is. That possibly will comprise of existing liens and even current residents that need to be put out.
A bank-owned property, conversely, is a much cleaner and attractive transaction. The REO property was unable to find a buyer during foreclosure auction. Now the lender 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 standard disclosure requirements.
For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement,
a document that usually requires sellers to disclose any defects they are informed of.
By hiring Martin Lopez, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Are REO properties a bargain in Downey?
It's frequently presumed that any foreclosure must be a steal and an opportunity for easy money. This often isn't true. You have to be very careful about buying a repossession if your intent is to make a profit. Even though the bank is usually anxious to sell it soon, they are also motivated 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 buying 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 in buying REO property from them. To get their properties advertised on the local MLS, the lender will usually hire 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 what they know about the condition of the property and what their process is for receiving offers. Since banks usually 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 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 goes for any real estate offer.)
After you've submitted your offer, you can expect the bank to make a counter offer. From there it will be your choice whether to accept their counter, or make another counter offer.
Be aware, you'll be working with a process that generally involves a group of people at the bank, and they don't work evenings or weekends. It's not unusual for the process of offers and counter offers to take days or even weeks. Martin Lopez is used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.