Interested in REO property or a foreclosure in San Francisco?
Just as with any property purchase, your smartest move is to hire a professional real estate agent. For more information, just contact me through my site or e-mail me. I'm happy to address any questions you have about real estate foreclosures.
What's an REO?
"REO" is Real Estate Owned. These are houses which have been foreclosed upon that the bank or mortgage company presently possesses. This differs from a property 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. And on top of all that, you'll receive the property 100% as is. That possibly could include 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 did not find a buyer during foreclosure auction. Now the lender 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.
Take notice that REOs may be exempt from typical disclosure requirements. In California, for example, banks are exempt from giving a Transfer Disclosure Statement, a document that typically requires sellers to make known any defects they are aware of. By hiring Circa Real Estate Group, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Am I assured a low price when purchasing an REO property in San Francisco?
It is commonly believed that any REO must be a bargain and a possibility for guaranteed profit. This often isn't true. You have to be very careful about buying a repossession if your intent is profit from the sale. Even though the bank is usually anxious to offload it soon, they are also motivated to get as much as they can for it.
Look carefully at the listing and sales prices of competing properties in the neighborhood when making an offer on an REO. And factor in any repairs or upgrades necessary to prepare the house for resale or moving in. The bargains with money making potential exist, and many people do very well buying and selling foreclosures. But there are also many REOs that are not good buys and may lose money.
Time to make an offer?
Most mortgage companies have a department dedicated to REO that you'll work with while buying REO property from them. Normally the REO department will use a listing agent to get their REO properties listed on the local MLS.
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", it may be in your best interest to include an inspection contingency in your offer that gives you time to check for hidden damage and retract the offer if you find it. As with making any offer on real estate, providing documentation proving your ability to pay may make your offer more attractive, such as a pre-approval letter from a lender.
After you've submitted 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. Your transaction could be final in a single day, but that's rare. Since offers and counter offers usually allow a day or more for the other party to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer.
Circa Real Estate Group 1117 Geary Boulevard ste. 400 San Francisco, CA 94109
Look carefully at the listing and sales prices of competing properties in the neighborhood when making an offer on an REO. And factor in any repairs or upgrades necessary to prepare the house for resale or moving in. The bargains with money making potential exist, and many people do very well buying and selling foreclosures. But there are also many REOs that are not good buys and may lose money.
