Home Buying in Venice>Question Details

Sarah, Home Buyer in Venice, CA

What is the process of buying a foreclosed home?

Asked by Sarah, Venice, CA Mon Oct 25, 2010

First time homebuyer, looking for a home in Venice CA for low price.

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12
Hi Sarah,

The REO business has become quite streamlined and are listed along with standard sales and short sales. When looking at a listing, there is a section called "listing type." It will either say: Standard, Short pay, or REO (sometimes says foreclosure).

Most people have said to work with an agent. I agree. Pick someone you feel comfortable with and who has reviews about them from past clients online. Ask them for the name/number of their lender and get prequalified. There is no point shopping unless you know how much you can spend ;) If their lender can't qualify you, always get a second opinion.

Best of luck.
0 votes Thank Flag Link Wed Aug 31, 2011
When buying a Foreclosed home or really any property for that matter, one of the most important things you need to do is acquire a buyers agent to assist you in the transaction. I have listed hundreds of "REO" properties-these are bank owned foreclosed homes, feel free to contact me anytime with questions you may have or if you do need a Realtor in the area.

Buying an Reo has it's positives and negatives, many times people think they will automatically get a good deal on buying a foreclosed home-Getting a good deal on a foreclosure will depend upon a few things:
1. The condition of the property-many times these homes need quite a bit of repair and the banks do limit the repairs they will do
2. You are buying Truly As-Is
3. Many times the Bank lists the property knowing the list price will bring in multiple offers racking up the sales price quite a bit-I have seen Reo "Foreclosed homes" get bidded up an additional $100,000 from the initial listing price
4. Many times you will get as good as a buy with a traditional home sale as the previous owner to better care of there home.

As a stated before, hire a local Real Estate Agent that knows the area, they will be a great asset to you and can perform all the negotiations with the bank during your home purchase.

I wish you much success in buying your next property, I live and work locally-feel free to contact me anytime.
Have a great day,
Heather Paul, Realtor
Coldwell Banker
0 votes Thank Flag Link Thu Aug 18, 2011
Hi Sarah,
It all depends on what stage of the foreclosure process your buying in. It sounds as if your main objective would be to buy a home under market value at a low price. There are various methods of getting a great deal in this current market and I wouldn't recommend that you limit yourself to just foreclosed homes. I can share with you the various methods I use for my clients that save them thousands of dollars when buying a home. Send me an email with a detailed description of the type of home your looking for and I will show you how much you will be saving if you let me negotiate on your behalf at no cost or obligation of course.
0 votes Thank Flag Link Mon Oct 25, 2010
Sarah,

Buying a foreclosure property is much like buying a "standard sale" property in that the listings all go on the MLS, you can view the property, and submit an offer. (the offer forms might differ slightly when submitting an offer on a foreclosure vs. a regular sale). Foreclosure properties are often priced to sell, so you need to watching the listings every day, and be able to view and submit offers quickly.

Also, banks usually only entertain offers that are complete, with pre-approval (from a major bank) ready, and proof of funds for down payment readily available too. So be sure you have both of these, and if you need a referral for a great lender who can help you out with a pre-approval, let me know. The pre-approval process is very quick and easy.

If you need an agent who is extremely experienced with foreclosures, feel free to contact me. Or even if you just want to get the newest listings sent to you, so you are among the first to see them, I'd be happy to get those to you too.

Best of luck!

Richard Schulman
Keller Williams Realty
#1 Buyers Agent KW LA Region
(310) 482-0173
schulmanrd@yahoo.com
0 votes Thank Flag Link Mon Oct 25, 2010
Hi Sarah,

The first step is to be vigilant about the listings that are coming onto the market in Venice. My latest foreclosure property purchase for a buyer was in Santa Monica and we presented the offer to the bank within 24 hours of seeing the property as the property was priced to sell. My buyer was able to buy this 8% under the listed prices and we closed 30 days ago. There were some physical inspection problems that we had to deal with however these did not affect her securing a loan to buy the property.

My advice is the following:

1) Track property listings DAILY- banks are not strategic about when they list foreclosures and the properties that are priced well tend to sell quickly, your agent can set up daily tracking for you.

2) Be aware of the differences in value for the different pockets in Venice (Oakwood, Silver Triangle, Canals etc)

3) Be ready to make a clean offer to the bank. The cleanliness if your offer can make the difference between the bank accepting your offer or moving onto the next buyer.

Work with an agent that can guide you through the buying process, an agent that knows Venice well and who has closed at least one bank foreclosure transaction.

If I can be of help feel free to contact me
Sylvia Kornicki
Bulldog Realtors on Abbot Kinney
310 622 3886
sylviakornicki@gmail.com
0 votes Thank Flag Link Mon Oct 25, 2010
Buying a home that the bank now owns is similar to purchasing a normal sale. An offer is written by your agent sent to the listing agent who gives it to the bank. A much misunderstood item is that buyers think they can purchase one at way below list price. These homes are usually listed at a very good value when they come on the market already. Since the bank has never lived in the property disclosure items can become an issue. Make sure you have inspections !!!
0 votes Thank Flag Link Mon Oct 25, 2010
Hi Sarah

One fact buyers need to know is that when the lender lists a foreclosure they want to present it at fair market value. Most buyers assume that a foreclosed property or short sale can be purchased below the asking price. Lenders do counter back to get the sales price they want if an offer is low. Many times there are multiple offers but the lender will pick the best one which will include sales price offered, terms and proof of funds etc. Cash is king in the foreclosure marrket. So many properties are priced really well that are standard sales. Check out those listings as well because you may find the house you want at a great price withot the hassle of trying to buy a foreclosure or short sale. Hope this information was helpful.

Linda Scheft
Coldwell Banker
Marina del Ret
310-754-8152
DRE# 01383000
0 votes Thank Flag Link Mon Oct 25, 2010
Hi Sarah,

There seems to be some confusion about what foreclosure means. Foreclosure is the process by which a lender takes a property back from the owners on title due to default. Once the home has gone through the foreclosure process it then becomes an REO (Real Estate Owned by the lender). California is a non-judicial foreclosure state. This means that the foreclosure process does not use the judicial system to take back a property but rather a bureaucratic process. That is why California uses a trust deed rather than a mortgage though.

In short, purchasing an REO can take the same length of time as a normal sale however buyers should be aware of the potential pitfalls of purchasing an REO. Former owners can sometimes accrue and default on debt that only shows on title during closing. This debt can attach itself as a lien on the property for which the new owners are responsible. As well banks seldom make repairs and prefer to sell the property "as is".

I agree with John that it is wise to have good agent familiar with short sales and REOs representing you through the process.

Best of luck in you property search,

Aaron Mirsky
Coldwell Banker Brentwood
aaron.mirsky@coldwellbanker.com
(310) 442-1684
0 votes Thank Flag Link Mon Oct 25, 2010
Hi Sarah, great question, generally foreclosed homes are in not the best physical shape, so it is imparative that you have a good Physical Inspection done on the home. Banks do not have to disclose and generally do not know any previous history of the home and problems that have taken place. Sometimes they are so bad that banks are aware and you have to be an "all cash" buyer, hence it is not necessarily the best type of purchase for a First time home buyer. Therefore a good Realtor could guide you thru the process. There might be homes on the market equally well priced as a Foreclosed home, but in better shape with a Traditional Seller. The most important aspect as any buyer you must be Pre-Approved to know what you are capable of purchasing.
Please let me know if you need help, by contacting me directly. I live in Marina Del Rey close to where you are looking.
Web Reference: http://www.endrebarath.com
0 votes Thank Flag Link Mon Oct 25, 2010
Buying a foreclosure is very similar to buying a standard sale property. The main differences are that it can take the bank longer to respond to your offer than the an average home seller, and the bank will not do any repairs or give any credits for any damage on the property. You are buying the home "as is".

Currently in Venice there are only 4 foreclosed properties on the market: 3 homes and 1 condo. So it can be difficult to find them, but they can be great deals.

If you have any other questions feel free to contact me below. Best of luck!

Alex Quaid
Partner

Certified Short Sale Specialist
c.310-717-1054 f.310-500-1328
http://www.alexquaid.com
DRE# 01838631
Web Reference: http://alexquaid.com/
0 votes Thank Flag Link Mon Oct 25, 2010
The sale of a foreclosure home can be just like a regular home sale. It can close in the normal 45 day timeframe. The bank is the seller. Some banks are very good to work with.
You would have a HUD registered agent make an offer for you on a HUD foreclosure. They have a period of time that the home is offered to owner occupants and non profit organizations first. After that it is open for bids from investors. A HUD home can close in a normal 45 day timeframe also.
Find an agent that works with foreclosures.

Christine
0 votes Thank Flag Link Mon Oct 25, 2010
Hi Sarah,

You should find a good buyers agent to work with - they would be able to provide you with listings of available properties that fit what you are looking for, plus work with you to arrange viewings of any properties you are interested in. They can also help you make an offer and negotiate the purchase of a property once you find one you like. Agents who represent buyers are customarily paid by the seller through a share of the commission, so for a buyer having an agent represent you is free of charge.

As far as the process, generally, buying a foreclosed home is not a lot different that buying a home from a regular seller - some differences are the banks will usually request that the buyer execute an addendum to the property with certain items that the seller will request as part of the agreement, such as shorter contingency periods and possibly a per diem (daily) charge to the buyer for not closing on time. But you are basically just buying a property where the seller is a bank rather than an individual, and the process is pretty much the same.

Good luck with your search! If you have any questions feel free to contact me - my info is below.

John Barry
DRE #01856079
Coldwell Banker Residential Brokerage
Cell: 323-810-7976
Email: john.barry@coldwellbanker.com
Facebook: http://www.facebook.com/RealtorJB
Twitter: @RealtorJB
0 votes Thank Flag Link Mon Oct 25, 2010
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