Buying REO property or a foreclosure in Huntington Beach?
Just as with any property purchase, your wisest move is to hire a professional real estate agent.
If you have questions regarding real estate in Huntington Beach, California, call me or send me an e-mail.
What's an REO?
"REO" is short for Real Estate Owned. These are properties which have been foreclosed upon that the bank or mortgage company presently possesses. 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. The buyer must also be able to pay with cash in hand. To top everything off, you'll get the property completely as is. That possibly could consist of prevailing liens and even current denizens that may require eviction.
A bank-owned property, on the contrary, is a much cleaner and attractive transaction. The REO property did not 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 prepare for the issuance of a title insurance policy to the buyer at closing.
Take notice 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 reveal any defects they are informed of.
By hiring Westline Real Estate, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Are REO properties a bargain in Huntington Beach?
It is commonly presumed that any foreclosure must be a bargain 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 make money. Even though the bank is usually anxious to offload it soon, they are also looking to get as much as they can for it.
Look carefully at the listing and sales prices of comparable homes in the neighborhood when making an offer on an REO. And factor in any repairs or remodeling 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 flipping foreclosures. Still there are also many REOs that are not good buys and may not be money makers.
All set to make an offer?
Most mortgage companies have a department dedicated to REO that you'll work with while buying REO property from them. To get their properties advertised on the local MLS, the lender will frequently hire a listing agent.
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 their knowledge about the condition of the property and what their process is for accepting offers. Since banks usually sell REO properties "as is", it may be in your best interest to include an inspection contingency in your offer that gives you time to check for unseen damage and withdraw the offer if you find it.
If, as a buyer, you can provide documentation demonstrating your ability to pay, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This is generally true for any type of real estate offer.)
Once you've presented your offer, you can expect the bank to make a counter offer. Then it will be your choice whether to accept their counter, or make another counter offer.
Understand, you'll be contending with a process that generally involves multiple 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. Westline Real Estate is are used to working around the schedules of this type of seller and will do everything possible to ensure there are no unnecessary delays.
Look carefully at the listing and sales prices of comparable homes in the neighborhood when making an offer on an REO. And factor in any repairs or remodeling 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 flipping foreclosures. Still there are also many REOs that are not good buys and may not be money makers.
