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Looking for REO property or a foreclosure in San Diego?
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Foreclosed upon and bank owned property purchases require the assistance of an experience professional.
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What is an REO?
"REO" or Real Estate Owned are properties which have been foreclosed upon and are now held by the bank or mortgage company. This is different than real estate 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. The buyer must also be ready to pay with cash in hand. Finally, you'll get the property 100% as is. That might include current liens and even current tenants that may require removal.
A bank-owned property, on the contrary, is a much neater and attractive transaction. The REO property didn't find a buyer during foreclosure auction. Now the lender owns it. The lender will attend to the removal of tax liens, evict occupants if needed and generally arrange for the issuance of a title insurance policy to the buyer at closing.
Do be aware that REOs may be exempt from normal disclosure requirements.
For example, in Nevada, it is optional for foreclosures to have a Property Disclosure Statement,
a document that ordinarily requires sellers to reveal any defects they are aware of.
By hiring Pacific One Realty, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Are REO properties a bargain in San Diego?
It is frequently presumed that any foreclosure must be a good deal and a chance for guaranteed profit. This often isn't true. You have to be prudent about buying a REO if your intent is profit from the sale. While it's true that the bank is typically anxious to offload it quickly, they are also motivated to minimize any losses.
Look closely 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.
It is possible to find REOs with money-making potential, and many people do very well flipping foreclosures. However there are also many REOs that are not good buys and may lose money.
Prepared 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 use 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 concerning the condition of the property and what their process is for accepting offers. Since banks usually sell REO properties "as is", it's often prudent 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 proving 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 goes for any type of real estate offer.)
After you've made your offer, you can expect the bank to counter offer. Then it will be up to you to decide whether to accept their counter, or make another counter offer.
Your transaction might 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. Pacific One Realty is accustomed to these situations and will work to ensure there are no undue delays.
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