Making an offer on REO property or a foreclosure in Burlingame?
|Foreclosed upon and bank owned property purchases require the assistance of an experience professional. Should you have questions about real estate in Burlingame, California, call me or send me an e-mail.|
What's an REO?"REO" means Real Estate Owned. These are houses which have been foreclosed upon that the bank or mortgage company now holds. 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 accumulated during the foreclosure process. You must also be able to pay with cash in hand. To top everything off, you'll accept the property completely as is. That possibly may consist of existing liens and even current occupants that need to be evicted.
A bank-owned property, conversely, is a much neater and attractive deal. The REO property didn't find a buyer during foreclosure auction. The lender now owns it. The lender will see to 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.
Note that REOs may be exempt from typical disclosure requirements. In California, for example, banks do not have to give a Transfer Disclosure Statement, a document that usually requires sellers to make known any defects they are informed of. By hiring THIAT LIANG (broker, 650-888-5829, former Prudential Ca. Realty Top Producer and Diamond Club), you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Am I guaranteed a bargain when purchasing an REO property in Burlingame?It is commonly believed that any REO must be a bargain and an opportunity for guaranteed profit. This isn't always true. You have to be cautious about buying a repossession if your intent is profit from the sale. While it's true that the bank is usually eager to offload it fast, they are also looking to get as much as they can for it.
When contemplating the value of REO property, 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 buying foreclosures. But there are also many REOs that are not good buys and may lose money.
Time to make an offer?Most banks have staff dedicated to REO that you'll work with while buying REO property from them. Usually 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 what they know concerning the condition of the property and what their process is for getting offers. Since banks almost always 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 withdraw 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 is generally true for any real estate offer.)
Once 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 make another counter offer. Realize, you'll be working with a process that most likely involves multiple people at the bank, and they don't work evenings or weekends. It's quite common for there to be days or even weeks of going back and forth.