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Interested in REO property or a foreclosure in Los Angeles?
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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 completed the foreclosure process and are presently owned by the bank or mortgage company. 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 added during the foreclosure process. You must also be prepared to pay with cash in hand. Finally, you'll accept the property completely as is. That possibly will consist of current liens and even current tenants that may require expulsion.
A bank-owned property, on the contrary, is a much cleaner and attractive transaction. The REO property was unable to find a buyer during foreclosure auction. The lender now owns it. The bank will attend to 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 standard disclosure requirements.
In California, for example, banks are not required to give a Transfer Disclosure Statement,
a document that ordinarily requires sellers to disclose any defects of which they are aware.
By hiring Alexander Premier Properties, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Is REO property in Los Angeles a bargain?
It is commonly believed that any REO must be a good deal and a possibility for easy money. This frequently isn't true. You have to be cautious about buying a REO if your intent is make money. Even though the bank is usually eager to sell it fast, they are also looking 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 buying foreclosures. Still there are also many REOs that are not good buys and not likely to turn a profit.
Time to make an offer?
Most banks have a department 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 typically contract with a listing agent.
Before 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 what they know regarding the condition of the property and what their process is for receiving 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 retract the offer if you find it.
As with making any offer on real estate, you'll make your offer more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.
After you've presented your offer, it's customary for the bank to counter offer. At this point it will be your decision whether to accept their counter, or submit another counter offer.
Your transaction could be final in one day, but that's rare. Since offers and counter offers usually give the other party a day or longer to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer.
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