Purchasing REO property or a foreclosure in Milpitas?
Purchasing a bank-owned property is not something to be taken lightly.
For more information, simply contact me through my site or e-mail me. I'm happy to answer questions you have about real estate foreclosures.
What is an REO?
"REO" is an abbreviation for Real Estate Owned. These are properties which have gone through foreclosure and are currently possessed 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 accumulated during the foreclosure process. You must also be able to pay with cash in hand. Finally, you'll receive the property entirely as is. That may consist of prevailing liens and even current occupants that may require removal.
A bank-owned property, conversely, is a much neater and attractive proposition. The REO property didn't find a buyer during foreclosure auction. Now the bank 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.
In California, for example, banks are exempt from giving a Transfer Disclosure Statement,
a document that ordinarily requires sellers to tell you about any defects they are knowledgeable of.
By hiring May Lee / Judy Wang Realtors, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Are REO properties a bargain in Milpitas?
It's commonly believed that any foreclosure must be a good buy and a possibility for easy money. This often isn't true. You have to be very careful about buying a repossession if your intent is to make money. Even though the bank is usually anxious to sell it fast, they are also looking to get as much as they can for it.
Look closely at the listing and sales prices of similar properties 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. But, there are also many REOs that are not good buys and may lose money.
Prepared to make an offer?
Most mortgage companies 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 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 typically 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 unseen damage and cancel the offer if you find it.
As with making any offer on real estate, providing documentation proving your ability to secure financing may make your offer more attractive, such as a pre-approval letter from a lender.
After you've made your offer, it's customary for the bank to respond with a counter offer. From there it will be your decision whether to accept their counter, or make another counter offer.
Understand, you'll be contending with a process that most likely involves several people at the bank, and they don't work evenings or weekends. It's not uncommon for there to be days or even weeks of negotiating back and forth. May Lee / Judy Wang Realtors is used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.
May Lee / Judy Wang Realtors 1221 E. Calaveras Blvd., Milpitas, CA 95035
Look closely at the listing and sales prices of similar properties 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. But, there are also many REOs that are not good buys and may lose money.