Making an offer on REO property or a foreclosure in SACRAMENTO?
Foreclosed upon and bank owned property purchases require the assistance of an experience professional.
What's an REO?
"REO" or Real Estate Owned are properties which have been through foreclosure that the bank or mortgage company currently owns. This is different than a property 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 able to pay with cash in hand. To top everything off, you'll receive the property entirely as is. That possibly will comprise of prevailing liens and even current denizens that may require eviction.
A bank-owned property, by contrast, is a more tidy and attractive transaction. The REO property was unable to find a buyer during foreclosure auction. Now the lender owns it. The bank will attend to the removal 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 typical disclosure requirements.
In California, for example, banks are not required to give a Transfer Disclosure Statement,
a document that normally requires sellers to tell you about any defects of which they are knowledgeable.
By hiring LIGHTHOUSE REAL ESTATE GROUP, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Are REO properties a bargain in SACRAMENTO?
It is sometimes presumed that any foreclosure must be a good deal and a possibility for guaranteed profit. This isn't always the case. You have to be very careful about buying a REO if your intent is to make money off of it. Even though the bank is usually eager to sell it fast, they are also motivated to minimize any losses.
When contemplating the value of 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.
The bargains with money making potential exist, and many people do very well flipping foreclosures. However there are also many REOs that are not good buys and may not be money makers.
Time to make an offer?
Most lenders have a department dedicated to REO that you'll work with when buying REO property from them. To get their properties advertised on the local MLS, the lender will often hire a listing agent.
Before making your offer, you'll want to contact either the listing agent or REO department at the bank and find out as much as you can about their knowledge concerning the condition of the property and what their process is for receiving 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 unseen damage and terminate 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 presented your offer, it's customary for the bank to make a counter offer. At this point it will be your choice whether to accept their counter, or submit another counter offer.
Be aware, you'll be working with a process that usually involves several 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. LIGHTHOUSE REAL ESTATE GROUP is accustomed to these situations and will work to ensure there are no unnecessary delays.