REOs & Foreclosures on Sale in San Diego County!

In my past 2 postings I've gone over in fine detail the short sale process. The REO (or foreclosure) process of purchasing a home is the Readers' Digest version and typically with a much better outcome. The foreclosure begins with a Notice of Default. After missing a couple of payments (sometimes as many as 6 months worth) the lender will file and record this official notice. From that point the lender can take back the home in 3 months and 3 weeks. The weeks stems from the publishing of their intent in a newspaper for 3 consequetive weeks after the 3 month period. At any time after that, the bank can reposses the home. They will typically offer it for sale at a "Trustee's Sale" on the courthouse steps. They will place a "reserve" on it (or lowest amount they will accept for the property). Should that reserve not be met, the bank then decides to include the property in their "Real Estate Owned" (REO) inventory. They will market the property as any seller would by having it appraised, selecting a Realtor, listing it for sale and negotiating the terms. And that's where this whole process becomes interesting.

Prior to relinquishing the home, the previous owner may choose any number of avenues to vacate the premises. They may leave in anger and trash it on the way out or as they carefully maintain the home until their last day and regretfully leave with probably a bitter taste in their mouth from the bank's lack of response or misinformation. I've seen holes in the floor where toilets once stood, carpet so soiled I believe they disassembled their motorcycle on it, topless cabinets with their granite slabs long since removed and floor tiles broken methodically one by one. Whatever the condition, the home needs to be sold. And that, my friend, can be an exhilerating experience for any bargain hunter. But beware...this environment is not for the faint hearted...and NOT for the do-it-yourselfer. I'm speaking of the armchair investors who want the hot deal but don't want to be tied down to one Realtor. I'm speaking of those that want to "keep their options open". I've said this before... a qualified Realtor is worth their weight in gold in this volatile market. It's fine to surf the internet and look, but let your Realtor take you on tours, give you direction and help you wade through the mountains of paperwork. No two banks have the same procedure. Your Realtor will ascertain whether the lender has other offers, what type of financing or closing costs will be offered, whether the lender will consider repairs or a termite inspection. In short, your Realtor is your attorney, your psychologist and your guide.

When you offer on an REO property you will likely have competition. In my most recent open house for one of my REO properties, there was a deluge of buyers (many side by side with their Realtor) who flew the property to determine in a matter of minutes whether this should be their conquest. They were poised with lender letter in hand determining to be the first offer in if this was "IT". By day three of this new REO listing I had 27 showings and 6 offers. Only 2 of the offers were complete. That is, the real estate agents did not read the instructions on the packets provided and their offers are not submitted to the bank. The banks are very specific about the terms and process they follow. As they create a purchase addendum that will be their used throughout the country, the agent needs to be familiar with this document. It will supercede the standard California Purchase Agreement. So choose your agent wisely. I recommend someone who is a FULL-TIME Realtor and one who studies and knows this market...not a lender who happens to be a Realtor. I may offend a few people with my opinion but honestly I don't want a dentist who happens to sell cars also. I want a professional. In this market, you need to stay on top of things and one career is enough. So off my soapbox and on to the REOs again.

Banks who own property today are anxious to dump their housing inventory and your response time will typically be less than seven days. So with your agent selected, find a great lender and get that lender letter in hand. My recommendation? Jim Auten, American Capital Home Loans at (760) 975-0255, jim@achlinc.com or www.americancapitalhomeloansinc.com. Be prepared for multiple offers. I am typically seeing offers $20,000 to $30,000 over the asking price. The stronger you make your offer, the better your chances. The strength of your offer comes from the amount down, your credit score, whether you need closing costs paid, and closing timeframes. Banks can and do pay closing costs (typically up to 3%). If you need the assistance well, then you need it. But if you can keep your offer clean, your chance increases dramatically. A bank looks at the net amount to them plus the ability to close. They will rarely look at a contingent offer so sell your home first, rent something temporarily and strengthen your buying position.

Once your offer is selected, you will begin your inspection period. Rely heavily on your home inspector as the lender will not be able to give you the history of the property. Their disclosures are minimal at best. Your agent will help you go over your Natural Hazard Disclosures, escrow instructions, Homeowners Association CC&Rs, etc. All of these reports should be given to you in the early stages of your escrow to help you decide if this is the home for you. Typically your contingency period is a "passive removal" which means you must put any issues in writing by a certain time period (typically 7 days). If you don't notify the seller in writing, the addendum usually states that you have checked out the property and have AGREED to the current condition. So watch your time frames and read your addendums!

Hopefully, your escrow will be a smooth transaction as the REOs for each bank are handled by the same escrow companies. Your Realtor will assist you along the way and most interaction will be via email to keep you updated. My experience as an REO agent has been a great one. I pride myself in responding to agents as quickly as possible. The process can be frustrating if the banks give too many assets to any one agent. That agent can't possibly handle the load and their response time and service is deplorable. I am always happy to receive new REO assets and look forward to closing a transaction with you in the very near future!

Visit my website at www.ViewKimsHomes.com and click on featured properties for my current list of REOS, short sales and equity listings along with details and photos. Email or call today. I would love to help you through this exhilarating process and hand you the keys to YOUR dream home AT AN INCREDIBLE PRICE next month!!