| Thinking of buying a bank-owned property and making | | | | considered.o Beware of being caught up in a bidding |
| a killing? Here's some ways you can prepare for it: | | | | war and paying more than the market value. It could |
| REO or Real Estate Owned is property that goes | | | | be that the particular foreclosure you are looking at is |
| back to the mortgage company after an unsuccessful | | | | not a bargain. |
| foreclosure auction. The majority of foreclosure | | | | What banks look for:o Banks want to get the highest |
| auctions do not even reach the bid stage. If there was | | | | price possible and have no intention of selling cheap.o |
| enough equity in the property to satisfy the loan, the | | | | Once you make an offer the banks presents a |
| owner could have sold the property and paid off the | | | | counter-offer.o You should be able to counter the |
| bank. This is why the property ends up at a | | | | counter-offer.o Even if your offer is accepted, the |
| foreclosure or trustee sale. | | | | bank might state that it is 'subject to corporate |
| The process of foreclosure sales:o Sales begin with a | | | | approval'.o Your offer or counter-offer will most likely |
| minimum bid that includes the loan balance, any | | | | be reviewed and have to be approved by individuals |
| accrued interest, plus attorney's fees and any costs | | | | and companies. |
| association with the foreclosure process.o To bid at a | | | | The Property:o Banks intend selling a property status |
| foreclosure auction, one must have a cashier's check | | | | quo - 'as is' as it is commonly known.o Banks will |
| for the full amount of your bid.o If you are the | | | | provide pest certification, but it has to be included in |
| successful with your bid, you obtain the property in "as | | | | your offer and negotiated.o The Bank might not agree |
| is" condition, which could have someone still living in the | | | | to do any repairs, but you can do all inspections at |
| property. There may also be other legal claims against | | | | your expense.o The offer you have made the bank |
| the property.o What is owed to the bank is almost | | | | should have an inspection contingency period that |
| always more than what the property is worth and | | | | permits you to end the sale if inspections show |
| therefore very few foreclosure auctions result in a | | | | unanticipated damages that the bank will not take care |
| successful sale.o The property then goes back to the | | | | off.o Though you have agreed to "as is", you can talk |
| bank and becomes an REO, or Real Estate Owned | | | | to the bank to make repairs or give you credit after |
| property.o Now the bank owns the property and the | | | | you've completed the inspection. They might |
| mortgage loan no longer exists.o The bank handles | | | | re-negotiate to take the transaction ahead instead of |
| any eviction, if necessary, and might do some repairs.o | | | | placing the property back on the market.o Banks are |
| The bank also negotiates with the IRS for removal of | | | | exempt from the California Sellers Transfer Disclosure |
| tax notices and pays off any dues.o The purchaser of | | | | Statement (TDS-14). The real estate agents involved if |
| an REO property will receive a title insurance policy | | | | any, representing you or the bank, are obligated to |
| and the opportunity to inspect the property. | | | | make available their disclosure statements.o Banks |
| What to look out for:o An REO property is often not a | | | | mostly do not give financing on their REOs, but it |
| great bargain.o It is better to do your homework | | | | doesnt hurt to ask. Particularly if the property has |
| before making an offer.o If you are successful, you | | | | extensive damage. |
| must ensure that the price you pay is at par with other | | | | Do check all papers, reports and forms BEFORE you |
| homes in the neighborhood.o The costs of renovation, | | | | make the offer and you could just make yourself the |
| including the time taken to complete them, should be | | | | best deal ever!!! |