Looking for REO property or a foreclosure in Pismo Beach?
Smart consumers will turn to a seasoned pro when considering the purchase of a foreclosed property.
What's an REO?
"REO" or Real Estate Owned are houses which have been through foreclosure that the bank or mortgage company currently possesses. 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 prepared to pay with cash in hand. And on top of all that, you'll accept the property entirely as is. That possibly will consist of existing liens and even current occupants that need to be thrown out.
A bank-owned property, on the contrary, is a more tidy and attractive proposition. The REO property didn't find a buyer during foreclosure auction. Now the bank owns it. The lender will deal with the removal of tax liens, evict occupants if needed and generally arrange for the issuance of a title insurance policy to the buyer at closing.
Note that REOs may be exempt from normal disclosure requirements.
In California, for example, banks are exempt from giving a Transfer Disclosure Statement,
a document that usually requires sellers to reveal any defects of which they are knowledgeable.
By hiring Ocean West Properties, you can rest assured knowing all parties are fulfilling California state disclosure requirements.
Are REO properties a bargain in Pismo Beach?
It is commonly thought that any REO must be a bargain and an opportunity for easy money. This often isn't true. You have to be very careful about buying a REO if your intent is to make money off of it. Even though the bank is typically anxious to offload it fast, they are also looking to get as much as they can for it.
Look carefully at the listing and sales prices of comparable properties in the neighborhood when making an offer on an REO. And factor in any repairs or upgrades necessary to prepare the house for resale or moving in.
It is possible to find REOs with money-making potential, and many people do very well buying foreclosures. But, there are also many REOs that are not good buys and may lose money.
Ready to make an offer?
Most banks have a department dedicated to REO that you'll work with when buying REO property from them. To get their properties advertised on the local MLS, the lender will often hire a listing agent.
Prior to 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 taking offers. Since banks typically sell REO properties "as is", you may want to include an inspection contingency in your offer that gives you time to check for unseen damage and retract the offer if you find it.
As with making any offer on real estate, providing documentation proving your ability to secure financing may make your offer more attractive, such as a pre-approval letter from a lender.
After you've submitted your offer, you can expect the bank to make a counter offer. Then it will be your decision whether to accept their counter, or make another counter offer.
Your transaction could be settled in one day, but that's usually not the case. 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. Ocean West Properties is used to working around the schedules of this type of seller and will do everything possible to ensure there are no undue delays.