Purchasing REO property or a foreclosure in Beverly Hills?
Investing in a bank-owned property is not something to be taken casually.
If you have any questions about real estate in Beverly Hills, California, call me or send me an e-mail.
What's an REO?
"REO" stands for Real Estate Owned. These are houses which have completed the foreclosure process that the bank or mortgage company now holds. This is not the same as real estate 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 ready to pay with cash in hand. And on top of all that, you'll get the property 100% as is. That possibly will involve existing liens and even current residents that may require removal.
A bank-owned property, conversely, is a much cleaner and attractive deal. The REO property didn't find a buyer during foreclosure auction. The bank now owns it. The bank will handle the elimination of tax liens, evict occupants if needed and generally organize for the issuance of a title insurance policy to the buyer at closing.
Take notice 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 typically requires sellers to make known any defects of which they are informed.
By hiring PlayaVistaListings.com, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Am I assured a bargain when investing in an REO property in Beverly Hills?
It is frequently assumed that any foreclosure must be a good deal and a chance for easy money. This often isn't true. You have to be cautious about buying a REO if your intent is to make money off of it. Even though the bank is often eager to offload it quickly, they are also motivated to minimize any losses.
Look closely at the listing and sales prices of comparable homes 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 foreclosures. However 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 when buying REO property from them. Typically 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 learn as much as you can about what they know regarding the condition of the property and what their process is for accepting offers. Since banks almost always sell REO properties "as is", you may want to include an inspection contingency in your offer that gives you time to check for unknown damage and terminate 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 goes for any type of real estate offer.)
After you've presented 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 submit another counter offer.
Be aware, you'll be contending with a process that probably involves a group of people at the bank, and they don't work evenings or weekends. It's not uncommon for there to be days or even weeks of negotiating back and forth.
* MOL = More or Less
PlayaVistaListings.com Keller Williams 439 N. Canon Drive, Penthouse Beverly Hills, CA 90210
Look closely at the listing and sales prices of comparable homes 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 foreclosures. However there are also many REOs that are not good buys and may lose money.
