Purchasing a Foreclosure

Purchasing REO property or a foreclosure in Palm Springs?

Foreclosed upon and bank owned property purchases require the assistance of an experience professional.

What is an REO?

“REO” or Real Estate Owned are properties which have been foreclosed upon and are currently possessed by the bank or mortgage company. 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 ready to pay with cash in hand. And on top of all that, you’ll get the property completely as is. That possibly will comprise of prevailing liens and even current residents that need to be expelled.

A bank-owned property, by contrast, is a more tidy and attractive deal. The REO property didn’t find a buyer during foreclosure auction. Now the lender owns it. The lender will deal with 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.

Take notice that REOs may be exempt from typical disclosure requirements. For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement, a document that normally requires sellers to reveal any defects of which they are knowledgeable. By hiring Desert Realty,Inc., you can rest assured knowing all parties are fulfilling California state disclosure requirements.

Is REO property in Palm Springs a bargain?

It is sometimes assumed that any REO must be a bargain and a chance for easy money. This simply isn’t true. You have to be very careful about buying a repossession if your intent is make money. Even though the bank is usually anxious to offload it soon, they are also motivated to minimize any losses.

Look carefully 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. Still 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 in 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 learn 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 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 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 type of real estate offer.)

Once you’ve made your offer, you can expect the bank to make a counter offer. From there it will be your decision whether to accept their counter, or submit another counter offer. Your deal could be settled 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. Desert Realty,Inc. is accustomed to these situations and will work to ensure there are no unnecessary delays.