|
Buying Bank Owned Homes & Short Sales -  "Buyer's point of view"
There is a lot of interest in buying bank owned properties these days. Often the information offered is for sale, with the promise that you can make lots of money with little effort once you know "the secret formula". The fact is there really is no secret formula, and to make any type of money requires strong effort, and guidance. Many times the effort is there but it's like the person that is driving to a designation, could use some help, and will not ask for directions.
Let's not let this happen...So let's get started...
What is a REO? What is a Foreclosure? - What's best for a Buyer?
REO stands for "Real Estate Owned". These are properties that have gone through "Foreclosure" process and are now owned by the bank or mortgage company. This is not the same as a property up for foreclosure auction. When buying a property during a sale, you must pay at least the loan balance plus any interest and other fees accumulated during the foreclosure process. You must also be prepared to pay with cash in hand. An REO is a much "cleaner" and attractive transaction; and is What's best for the buyer.The REO property did not find a buyer during the Foreclosures auction. The bank now owns it. The bank will see to the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing. Do be aware that REO's may be exempt from normal disclosure requirements.
What is a Short Sale?
A Short Sale is when the current owner of the house has fallen behind on his/her payments and is not able to work out a repayment plan with the lender. They then in turn ask for permission to basically "Sell" the home for less than what they owe on it. Please note, the Lien Holder(s) or Bank(s) may or may not give their permission. The offers are approved by the Seller and then sent to the Lien holder for approval. The Lien Holder must approve the price before anything will happen and this process can take 3-6months and it may never happen. Typically, the Bank or Mortgage Company will not want to put the house into foreclosure due to the fact that it typically costs them anywhere from $30,000 - $65,000 to do so. So if there is a chance that they can recoup some of their loan, they will favor a short sale over owning the property. But I have to admit, Banks are so big, things are many times not handled in a logical manner and they are many times very very slow.
Short Sale - The Tip of the Iceberg - They can be Risky see article
There are many many things involved with a Short Sale. Let's start with just two questions. How many loans are on the property and does the Seller "qualify" for a Short Sale consideration? Big questions, but many times over-looked.
If there is two or more loans on the property, all would need to cooperate and how much will each discount? It may be even a matter of, will they return the phone call "Bottom-line"...The Short Sale process is like the Wild Wild West..there are NO RULES OF ENGAGEMENT! Tax liens, child support, mechanic's liens, Bankruptcy, Home Association Fees, and others, and these come from anywhere and at anytime. I've seen major problems arise one week before close of escrow and this can kill the deal and leave everyone at a loss!
Seller Short Sale Qualification?
Qualification is strict; it must be proven in writing and is subject to interpretation of the Bank. Many times this is not in place prior to the seller's offering the property for sale. Asking the right questions "prior" to your Offer, is extremely important! This is just one of many...
REO - Is it a bargain? It's commonly assumed that any REO must be a bargain and an opportunity for easy money. This simply isn't true. You have to be very careful about buying a REO if your intent is to make money off of it, or even you just want to buy a good bargain to live in. While it is true that the bank is typically anxious to sell it quickly, they are also strongly motivated to get as much as they can for it. When considering the value of an REO, 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 buying Foreclosures. This is why you need to have a knowledgeable Real Estate Agent who knows the process and can represent you well during the process. Typically, to buy an REO, the process can take up to 1-3 months depending on the backlog of current properties at the Bank or Mortgage Company.
Ready to make an offer?
Most banks have an REO department and/or Asset Manager that will work with your Agent when buying an REO property from them. Typically the REO department and/or Asset Manger will use a listing agent to get their properties listed on the local MLS. Before making your offer, your buyer agent will contact the Bank agent to find out as much as he can about what they know about the condition of the property and what their process is for receiving offers. Your agent will also check all his sources and along with his Knowledge and experience suggest a plan of action. Here is where "Pre-planning" and "Pre-preparation" will pay off.
It's in the Details?
Since banks almost always 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 the option to terminate the offer if conditions warrant it. As with any offer on real estate, you'll make your offer more attractive, and possibly enhance you a better deal, if you can include documentation of your ability to pay. (Please note, it's always best to be prepared and you should already have a "Pre-Purchase File" with your agent before you tour homes, because you need to be ready when you find it - great deals sell fast). Efficiency is key and being prepared is extremely important to your success. The Purchase File would include things such as a "specifically detailed" Pre-approval Letter from a well known lender, third party proof of funds to close escrow, copy of the deposit check, and a well known buyer agent to represent and guide you. Creditability comes in the Presentation and the Leader is your Agent. This is many many times overlooked, but a well known and respected Buyer Agent can make all the difference in your chances of winning a Bid/Offer. This is especially true if there is multiple offers.
A little about me?
I have over 20 years helping people and I'm ready to assist you with your Foreclosure/REO/Short Sale purchase process. When you are ready to proceed, you will want the very best and most knowledgeable person ready at your side. My Services is normally free to the Buyers for, Short Sales, Foreclosures, and most Bank Owned transactions. Please tak e a look at my Video Resume - click here.
No pressure, just good honest help with superior Knowledge, on-hands Experience, and a strong Industry Presence. It's easy...Let's start with, How can I help you?
Email Riley or even better, call my cell direct: 925-200-3908
Foreclosures Produce Great Opportunities For Home Seekers And Investors. Here's your chance to be notified of all new foreclosure listings that meet your criteria, absolutely FREE!
Not only will you be notified by email of all new listings that match your search criteria within our website, but your foreclosure search will also be compared against other participating agents listings within your desired area(s). All new listings added to the system that match your criteria will be emailed to you.
Please enter your email below. You will be emailed updates that match your criteria daily. Update your criteria or cancel at any time. Simply enter your search criteria in the comment box below, and we will provide you with a speedy response. The more information given, the more accurate your foreclosure list will be.
City(s)? Price Range? Max Age? Property Type? Bedrooms? Baths? Min. Square Footage? Garage? Include Short Sales? Other parameter? ? Please note: the stricter the parameters the less the results.
If you wish to "exclude Short Sales", please send me an email or put this in your message.
|
