Wendy,

By reading this thread myself, am so confused too. Here my two cents! First and foremost you may have to tell yourself if you are pre-approved by any financial institution on the difference that you won't cover. REO properties are totally different than a regular resale transaction, you must keep in mind that the banks, lenders, or service companies don't have any idea what the house offers more than what they were told by realtors offering a Broker Price Opinion on that particular property.

Los Angeles is in a REO driven market at the moment, if you are planning to move in the next six months you have a better chance to succeed in your purchase. Low interest rates, plenty of inventory , and different programs to assist educators such as CalFHA loan.

Consult a knowledgeable real estate professional that will listen to your needs and plan accordingly. Not every experienced realtor out there understands the foreclosure market, but most important is that you must have the mentality of get goer. REOs are a handful task to accomplish!!!

S-
What I am trying to tell you is I am an experienced REO agent, I have closed over 40 this year alone. Sellers are more accountable than banks, ask an agent to see the new CAR REO disclosure that tells you banks are exempt from NHD, TDS and everything else that all other sellers have to do in order to sell the property. I would say in your case for the write off and the ability to pay off your home means I would wait as well, but most homeowners would have to pay the higher payment the entire time they lived in the home, not just until they could refinance and move on to the next one. Most are not as savvy as you and as a professional I advise, basing everything they know, on not being able to sell or refinance in 5 years, if you can still afford then purchase, if you can't, don't, that simple. Escrow companies must make money to, but also know that you can negotiate with them as well, just like you can us, don't be afraid to pull your escrow from a title company if you are paying fees, it is your right as a buyer. In REO transactions, the bank always chooses the title company and escrow, so make them pay the fees. On the Time article just giving one side of the story, I'm just glad that someone finally gave that side, I understand the market real well and not everyone should buy now, but most first time buyers should, it would be real hard for them to develop the equity to refinance in 2 years to lower an interest rate if it goes up 1 point, plus, they usually do not have cash to buy the rate down or pay it off, the article was meant for those who can not pay cash.

Nick
(answering as I do BPO's for Banks)

Thank you all for the quick responses - I guess though I am missing Nick's point - is a non REO seller more accountable after escrow closes - I am ok to buy as is as long as I am comfortable with an inspection. The neighborhoods we are looking in are 50 years old so I doubt there are many orig owner sellers - Nick's comment "You can not put a price on knowing what modifications owners have made, who lived in the property, " - exactly how does a realtor find out this info about previous owners - just not sure how there is an advantage with a non REO - I have access to all public records - just as an agent does. And please folks, give me some credit - I know there are escrow fees - I am talking about charges such as "loan tie in fees" - which there would be none if there was not a loan - and what about those $165 notary fees!

I did read the Time article - a couple of things to point out - if interest rates are higher and the payment is higher don't forget that for many interest is a tax deduction so the increase is not as bad as spelled out - tax savings will make up for part of it. And in some cases, buyers can save a lot in the next year - enough to offset the increase in rates - if any. And this is all assuming home prices won't dip even lower - I would happily pay a higher interest rate - which can be refinanced, or the loan paid off - rather than to pay a higher price for the house. The higher house price triggers so much else - higher property taxes, higher house insurance, more commissions to realtors - oh I could go on and on - give me higher interest rates any day. It will mean less buyers will qualify and put us in a better negotiating position. The Time article just gives one side of the story.

And I will close with I guess there is no listing out there of "certified" REO or short sale agents - but thanks for the tips on finding one - would love to hear from an experienced one if there is one out there - that is interested in making a sale.

You are right. You do have the right to do a full inspection. If your looking to live in the house then find the house you like at the best deal. That best deal can be with a REO.

You can check out reo.com or just interview agents. Ask them if they are certified in anything even if they have any designations. There are several but it just shows their focus is on their careers and being a better and more knowledgable Realtor. If they are not certified in REO's but are in Short Sales, then that is ok too as that tells you that they still know the process and how to deal with the banks. Most importantly, feel comfortable with a agent. You need to feel trust for them and remember, they work for you not the other way around. REO's can be very good deals but any home can be a good deal.

If you want, give me a call and I can give you more information on what to ask and where to find more answers.

Kim Pape - 661-212-2032

S-
I'm not doubting your inspector as being fantastic, what I am trying to relate is the are so many hidden things that inspector's can not find, and there is no one to hold accountable after escrow has closed, the addendum's you sign in an REO transaction take away so much, read one really closely and you'll see what I mean. As a cash buyer you still have escrow fees, sorry about a bad experience, that should never happen in this customer service industry. As for a list of certified agents, well it is small, but if you give me a city, I can tell you a few that are certified REOMAC agents, which I feel is the most comprehensive training for REO agents to date.

I am a bit confused about Nicks answer - we have an excellent home inspector - I assume that an REO or short sale can be inspected - I realize that the bank may not do repairs but the inspection will tell us if the property is up to snuff - as for neighborhood trends - we can do that research ourselves. Also, let me clarify that we are not buying as an investment - the property will be lived in by one of the family members - hopefully for a long time. My question though still has not been answered - where does one find a list of these "certified" agents - or I guess I should now say - those agents that have taken a class. Also to clarify for Nick - we just made a purchase that closed last month - so we are not on the fence - we are now ready for purchase #2 but would like to get a little better deal than on #1 - so looking a the REOs. As to interest rates - we'll see - I am still getting pretty good quotes - we have an excellent loan broker - he seems to work miracles - we also have a lot of cash :) - in fact we are tempted to go all cash just to get those nasty escrow folks off our back - with all of their "hidden" fees! - sorry about that - bad experience with escrow on the last transaction - some of the things they charge for are just too much!

The state of California does not require a Realtor to be certified as a REO agent or a Short Sale agent. But those agents that do have the class and certifiation are showing you that they are learning everything on that subject. You want a Realtor is has Knowledge or that can find the answers. REO's can be a good deal. You will not know the history of the property but with a little more work on the part of you and your realtor together, you can find answers on the property. Some banks with not purchase a home warranty for the property but that is something that you can still purchase in closing to protect yourself. Home warranties cost less than $450 depending on the size of the house and if there is a pool. I have had dealings with some banks that gave my client everything he asked for even half of the cost to get a new roof put on the house and this was a major bank too. Banks can be willing to work with you, it depends on who the asset manager is and what relationship you realtor has with them or with the listing agent.

I do agree with Nick that interest rates are going to go up. Its a fact. The only problem is that no one can tell you when. But I would be willing to bet my life that they will go up after the national election. I do believe that this is the perfect time to buy, but you buy when it is right for you.

Kim

S-
Certifications are just a matter of completing classes that are put on by REO companies, or attending REO conferences. I do agree with you that REO's are the best properties to be had, but all property should be a 3 year minimum investment, most REO's you will have no clue at what has been done or will go wrong with them in that time frame. You can not put a price on knowing what modifications owners have made, who lived in the property, neighborhood trends, the kind of stuff you get when an owner has pride in what they are selling. Myself, as an investor, would gladly pay 20k-30k more to know everything that has been done to the property, know that it is not stigmatized, and it was taken care of. For the quickest buck, REO's are the way to go, but speculation purchasing is still a bad idea. On the short sale front, you can rescind an offer, but if you resubmit it could take just as long as the first time for an acceptance. I also recommend you read the Time magazine article outlined below that talks about waiting to purchase. I can almost guarantee that interest rates are going to rise real soon, I mean real soon, and if you are on the fence this article should help you make the jump one way or the other.

Nick

Thank you for the informative answer - who certifies the REO and short sale agents? The State of Ca (is it part of the real estate license)? The Real Estate Assoc? And where can I find a list of who is certified - is there a web site? Do those that are certified use this as part of their title - I have never seen one indication in an ad or online of anyone that is certified. thank you

Where you need to start is by defining where in the Los Angeles area you want to look at. Then I could either help you or refer you to a agent in that area. Yes, any agent can help you but it is better for you to find a agent that is cerified in REO's or Short Sales. These agents have taken the time to learn how to deal with the banks so that they can get answers faster. It does take longer to get answers from banks when you are buying/selling a short sale but if you are a position to take your time, then these can be good deals. Most REO's receive answers right away and there is a way to deal with the asset managers to get you the buyer more. There is a lot more about these types of deals and I would be more than happy to explain more for you and any other buyer who wants more information on these. Feel free to email me at kimppape@msn.com or call me at 661-212-2032

Hi Wendy. I work on a team of REALTORS and I can refer you to the short sale-foreclsoure specialist on my team. She and her partner work work in the Riverside area, near Moreno Valley. They are also knowledgeable about special city loan programs for teachers and any special teacher incentives offered by their lenders. If you email me (dlondon@remax.net) or call my associate directly at 800-856-4488. We would be happy to help you.

Hi Wendy,
I have prepared for my clients a list of things that they need to know about purchasing REO properties. If you email me I will be happy to send you a copy. Hopefully this will answer most of your questions. In reading the previous answers I would like to point out that REO properties are different than short sale properties. Short sale properties, if not sold, may become REO properties.
Best reagrds and good luck,
Walter- email me at walter@ocnorth.com

I appreciate that most agents are pro getting the buyer what they want and for the best possible price etc but I am still of the opinion that there are some good short sale and foreclosure buys out there and we are missing out - prove me wrong if you wish - find something better for a better cost - Also I am not sure why it is not in the buyers best interest to have to wait - we have all the time in the world and are patient - perhaps I just don't know how it all works - if an offer is made on a short sale or foreclosure can it be revoked before accepted? That would seem to protect us if prices fall - we'll just resubmit lower - or make the offer low in the first place so that once the bank gets around to dealing with it, it will be in line with the new lower prices. I have to believe that these foreclosures and short sales are going to someone - I know the banks don't want them - so who's getting them and how are they doing it? I can't believe they are just going to uneducated buyers that are overpaying - but maybe I am wrong. They seem to make up the biggest percentage of the inventory - at least in the market we are looking in - so if there is an agent out there that is not afraid to handle these please let us know.

Alright, yes the 2 of us are with Keller Williams, however, I never take the easy way out, short sales, inevitably, take a long time to go through, it is not in the buyers best interest, in a declining market, to make an offer and have to wait months to see if the bank accepts it. I will however show short sales if the clients want to go that route. That being said, I have a buyer's agent that takes people to the properties. Think of a real estate team like a baseball team, one pitcher is not derived to handle every situation, instead you have a starter, middle reliever, and a closer. That is how good teams work in real estate as well, we have specialists in each field. It is better to master one facet then be okay at all. My buyer's agent is not pro foreclosure or pro short sale. They are pro wants and needs analysis of each client, then getting them the best home at the most affordable price.

I ran out of space but I hope this helps, an agent should never steer you, just give you information and let you make an informed decision.

Nick

I am guessing that those that have already answered are with Keller Williams. We are also getting ready to buy house #2 this year (buying for/with children). First house was not a foreclosure and I feel that we may have missed out on some good deals. Our agent, who we are not using for this 2d purchase, would only show us a short sale or foreclosure if we practically dragger her there - and then she was so negative about how it would never work out. After going through the whole house buying process I really don't see why we can't get one of these good short sale or foreclosure deals - we are in no rush, we can be patient - we just need an agent that is pro foreclosure pro short sale - anyone out there? And please don't tell me to go with a strong agent in the area - they are all to pro, what I call the "easy" sales - not the ones they have to work at - like getting a short sale or foreclosure property.

ps - we don't need to see 15-20 properties in an afternoon - we can view what is out there on the internet and then narrow to those we actually want to visit - I don't think there will be that many .....

I as a Realtor, would suggest you search for an agent by the specific community you are looking into. I also recommend that you stay with a respectable brokerage such as Keller-Williams who has a motto of win-win for all parties. The Realtor you choose can be checked by viewing the Dept. of Real Estate for California and ensure that his record is up to your expectations.

Wendy,

Most all agents have access to foreclosure list and how REO properties work. I personally feel as an REO, buyers agent as better apt to handle your questions and concerns than listing agents that work 100 to 200 properties at a time. That is something you find with a lot of REO agents is we can not handle showing 15 to 20 homes in an afternoon because we have 30 BPO's and Listing worksheets, weekly status reports, and outstanding CFK's. I would just call a local Keller Williams office and ask to speak to a lead buyer agent for a top team, they should be able to help you out.

Nick