Purchasing REO property or a foreclosure in National City?
Just as with any property purchase, your smartest move is to hire a professional real estate agent. If you have questions regarding real estate in National City, California, call us
or send us an e-mail
What's an REO?
"REO" or Real Estate Owned are homes which have been foreclosed upon and are presently held 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 added during the foreclosure process. You must also be willing to pay with cash in hand. Finally, you'll get the property completely as is. That might comprise of existing liens and even current denizens that need to be evicted.
A bank-owned property, on the contrary, is a more tidy and attractive proposition. The REO property did not find a buyer during foreclosure auction. The lender now owns it. The lender will attend to the elimination of tax liens, evict occupants if needed and generally arrange 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 North Carolina, it is optional for foreclosures to have a Property Disclosure Statement, a document that usually requires sellers to tell you about any defects they are knowledgeable of. By hiring Realty World HomeCares, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Is REO property in National City a bargain?
It's frequently believed that any REO must be a steal and a possibility for guaranteed profit. This isn't necessarily the case. You have to be prudent about buying a REO if your intent is to make money. While it's true that the bank is typically anxious to offload it fast, they are also motivated to minimize any losses.
When contemplating what to pay for a foreclosure, 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 and selling foreclosures. However, there are also many REOs that are not good buys and may not be money makers.
Time to make an offer?
Most banks have a department dedicated to REO that you'll work with when buying REO property from them. Commonly 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 usually 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 unknown damage and withdraw the offer if you find it. As with making any offer on real estate, you'll make your offer more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
After you've submitted 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. 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. Realty World HomeCares is used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.