Making an offer on REO property or a foreclosure in Newport Beach?
Smart consumers will turn to a seasoned pro when considering the purchase of a foreclosed property.
What is an REO?
"REO" or Real Estate Owned are homes which have been foreclosed upon and are now held by the bank or mortgage company. This differs from 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 accrued during the foreclosure process. You must also be able to pay with cash in hand. Finally, you'll receive the property 100% as is. That possibly may involve current liens and even current residents that need to be thrown out.
A bank-owned property, on the contrary, is a more tidy and attractive transaction. The REO property didn't find a buyer during foreclosure auction. Now the bank owns it. The bank will take care of the elimination of tax liens, evict occupants if needed and generally organize for the issuance of a title insurance policy to the buyer at closing.
Note that REOs may be exempt from standard disclosure requirements.
For example, in California, banks are exempt from giving a Transfer Disclosure Statement,
a document that normally requires sellers to tell you about any defects they are knowledgeable of.
By hiring Marovish Properties, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Are REO properties a bargain in Newport Beach?
It is commonly believed that any REO must be a good deal and a possibility for guaranteed profit. This isn't necessarily true. You have to be cautious about buying a repossession if your intent is to make a profit. While it's true that the bank is usually eager to offload it promptly, they are also looking to get as much as they can for it.
Look carefully 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 remodeling necessary to prepare the house for resale or moving in.
There are bargains with potential to make money, 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.
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. 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 find out as much as you can about their knowledge concerning the condition of the property and what their process is for taking offers. Since banks typically sell REO properties "as is", you may want to include an inspection contingency in your offer that gives you time to check for unknown damage and cancel the offer if you find it.
If, as a buyer, you can provide documentation showing your ability to secure financing, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This holds for any real estate offer.)
Once you've submitted your offer, it's customary for the bank to counter offer. From there it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer.
Understand, you'll be dealing with a process that most likely involves a group of people at the bank, and they don't work evenings or weekends. It's not unusual for there to be days or even weeks of going back and forth. Marovish Properties is accustomed to these situations and will work to ensure there are no unnecessary delays.