Making an offer on REO property or a foreclosure in San Diego?


	Investing in a bank-owned property is not something to be taken lightly. If you have any questions regarding real estate in San Diego, California, call me or send me an e-mail.

What's an REO?

"REO" is an abbreviation for Real Estate Owned. These are properties which have completed the foreclosure process and are presently owned by the bank or mortgage company. This differs from a property up for foreclosure auction. Frank Atrash Realty has experience to share with foreclosures and bank owned properties in San Diego, California

Frank Atrash Realty has experience to share with foreclosures and bank owned properties in San Diego, California

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. The buyer 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 involve existing liens and even current tenants that may require expulsion.

A bank-owned property, by contrast, is a much neater and attractive proposition. The REO property did not find a buyer during foreclosure auction. Now the lender owns it. The lender will take care of the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.

Note that REOs may be exempt from normal disclosure requirements. For instance, in California, banks are exempt from giving a Transfer Disclosure Statement, a document that ordinarily requires sellers to tell you about any defects they are aware of. By hiring Frank Atrash Realty, you can rest assured knowing all parties are fulfilling California state disclosure requirements.

Is REO property in San Diego a bargain?

It's frequently assumed that any REO must be a good buy and a possibility for guaranteed profit. This frequently 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 typically eager to offload it fast, they are also looking to get as much as they can for it.

Frank Atrash Realty has experience to share with foreclosures and bank owned properties in San Diego, California

Look closely at the listing and sales prices of comparable properties 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 buying and selling foreclosures. But there are also many REOs that are not good buys and not likely to turn a profit.

Ready to make an offer?

Most lenders have staff dedicated to REO that you'll work with when buying REO property from them. To get their properties advertised on the local MLS, the lender will often 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 learn as much as you can about their knowledge about the condition of the property and what their process is for accepting offers. Since banks most commonly sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for hidden damage and cancel the offer if you find it. If, as a buyer, you can provide documentation showing your ability to pay, 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.)

After you've made 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. Understand, you'll be working with a process that usually involves multiple people at the bank, and they don't work evenings or weekends. It's typical for there to be days or even weeks of going back and forth.