Purchasing REO property or a foreclosure in Napa?


	Just as with any property purchase, your wisest move is to hire a professional real estate agent.

What is an REO?

"REO" is an abbreviation for Real Estate Owned. These are homes which have completed the foreclosure process and are presently owned by the bank or mortgage company. This is unlike a property up for foreclosure auction. Marcia Hadeler, REALTOR has experience to share with foreclosures and bank owned properties in Napa, California

Marcia Hadeler, REALTOR has experience to share with foreclosures and bank owned properties in Napa, California

When buying a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees amassed during the foreclosure process. You must also be willing to pay with cash in hand. To top everything off, you'll receive the property totally as is. That might involve existing liens and even current residents that need to be expelled.

A bank-owned property, conversely, is a much cleaner and attractive deal. The REO property did not 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.

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 typically requires sellers to reveal any defects of which they are informed. By hiring Marcia Hadeler, REALTOR, you can rest assured knowing all parties are fulfilling California state disclosure requirements.

Am I guaranteed a bargain when investing in an REO property in Napa?

It's commonly assumed that any foreclosure must be a steal and a chance for easy money. This simply isn't true. You have to be prudent about buying a repossession if your intent is make money. Even though the bank is typically eager to offload it fast, they are also motivated to minimize any losses.

Marcia Hadeler, REALTOR has experience to share with foreclosures and bank owned properties in Napa, California

Look carefully at the listing and sales prices of similar 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 flipping foreclosures. But there are also many REOs that are not good buys and may lose money.

Ready to make an offer?

Most mortgage companies have a department dedicated to REO that you'll work with in buying REO property from them. To get their properties advertised on the local MLS, the lender will typically use a listing agent.

Prior to 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 their knowledge concerning the condition of the property and what their process is for getting 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 withdraw the offer if you find it. As with making any offer on real estate, your offer may be more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.

After you've submitted your offer, it's customary for the bank to make a counter offer. Then it will be your choice whether to accept their counter, or offer a counter to the counter offer. Your transaction might 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. Marcia Hadeler, REALTOR is are used to working around the schedules of this type of seller and will do everything possible to ensure there are no unnecessary delays.