Archive for the ‘REO Homes’ Category

How to Purchase a Foreclosure

Wednesday, August 6th, 2008

It is not uncommon for a client to ask me about purchasing foreclosure homes.  We hear the misleading ads on the radio, “I just bought a home for $199 a month”.  While that number is totally unrealistic in Marin, foreclosures can be a bargain.  In some parts of the country banks and other owners have foreclosure auctions, other than the occasional homeowner (usually with an unrealistic reserve) I have not seen this in Marin. Although our foreclosure rate is significantly up from prior years it still is very low and most foreclosed properties are taken back by the bank.

In Marin, properties in foreclosure are sold at the court-house steps.  Buyers with cashiers checks (for the full amount) bid against each other and the bank.  The bank does not need a cashiers check because it is their loan that would be paid off.  Okay, get this straight, you need cash to buy the home, often you have never seen the inside of the house, and you many not be sure the title is completely clean.  Once you win the auction you can get title, go to a bank and then (after you bought the home) try to get a loan.  You also get to evict the occupants and finally see the inside of the home you just purchased.  The experienced buyers have lots of cash and make a bundle on most of them but do loose their shirts on about one in ten.  This is a rich person’s game as most of us don’t have the extra cash laying around and can’t afford our one purchase to be the dog that is a money looser.

So the court-house auction does not work for most of us but the next best thing is post foreclosure, bank owned property (REO – real estate owned by the bank). Once a bank takes a home back they want to sell it quickly because they are in the business of lending money, not owing excess homes.  These REO homes are priced (usually) realistically, as the banks wants to dump them within a month or two. Caution here; just because a home is an REO does not mean it is a good deal and the banks will negotiate.

If you are interested in looking for these homes ask your agent (or me if you don’t have one) as it is easy to do a search in the Marin MLS.

It pays to be an REO or Short Sale in Marin

Wednesday, March 19th, 2008

Home for Sale

March 18, 2008In an earlier post here I explained what an REO home is (they are homes owned by a bank- usually after a foreclosure) as well as a Short Sale (a sale where the bank will take less than they are owed).

Poking around the Marin MLS I noticed that a large percentage of REO and Short Sale listings are in escrow.  Though not always true, it is often perceived that REO properties are a bargain. Short Sales are know to have a high fallout rate in escrow but can also be a good deal.

Here are the percentages of single family homes in escrow from the Marin BARIES MLS:

REO:              43%

Short Sales:  27%

Others:           22%

At 43% in escrow REO’s are experiencing a seller’s market in Marin County Real Estate.

Warren Carreiro, Broker

What is a REO Home Sale?

Monday, March 10th, 2008

REO Hosue

REO House

March 10, 2008

REO is a real estate term which means “real estate owned”.  The real estate is owned by bank or lender, typically as a result of foreclosure.  When a bank lends you money to purchase a house, the home is collateral for the loan which means if you don’t make your payments the bank has the right to take ownership of the property.  Mind you, this is not property the bank wanted or wants to keep, it is a drag on their balance sheet and ties up money that could be used for other loans.

Once a bank owns the home they want to sell it a quickly as possible.  This does not mean a fire sale but often the prices are slightly under market price.  The banks will use a professional appraiser and a couple of real estate brokers to help determine market price.  The bank is not legally required to complete the usual disclosure documents because typically they don’t have enough information, though they still must disclose what they do know.  For buyer’s this means the home is purchase “as is” so it is especially important to get good inspections.

Warren Carreiro, Broker
Marin County Real Estate
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