Home Buying in San Leandro>Question Details

Dee, Other/Just Looking in San Francisco, CA

With all the foreclosures taking place in San Leandro, what are the pros and cons of buying a house that is in foreclosure?

Asked by Dee, San Francisco, CA Fri Apr 13, 2012

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Hello Dee,

There is no difference in purchasing a REO or regular sale. However, the REOs are snatched up pretty quickly...I've seen cash bids on homes up to $300K ..and that's what banks are looking for. You may have to put in several offers before one gets accepted as almost all REOs are bringing in multiple offers at the moment.

Please let me know if I can be of further assistance with your real estate needs.
0 votes Thank Flag Link Mon Apr 16, 2012
Pros:
--Foreclosures are generally priced lower than market value of properties offered as regular sales
--Although it may take a few days for the bank to respond (accept, counter or reject), it's still a lot sooner than a short sale lender would respond.
--Foreclosures will also sell close escrow sooner than a short sale

Cons
--Foreclosures (also known as REOS) have their own contract that diffesr from the standard California Association of Realtor forms -- so one will need to carefully review the terms
--If buyer doesn't close escrow on schedule, buyer is liable to pay $50-100/day for each day of delay
--Almost always AS IS sale -- no repairs, no credits
--Banks almost always insist on shorter contingency periods for buyer inspection, loan appraisal; and shorter escrow periods
--Even in areas where the local ordinance requires sewer lateral to be tested/repaired/replaced as condition of closing the sale, the foreclosing bank will want the buyer to take care of this
--Possible deferred maintenance or damaged specially if the property has been vacant for a while or if the previous owners had deliberately caused damage because of anger over being foreclosed
0 votes Thank Flag Link Sun Apr 15, 2012
With a foreclosure: what you see is what you get. Do not expect any repairs or betterments even if the house is in disrepair or reflects deferred maintenance. The price should reflect the condition of the property which is why REOs are often priced below what a normal sale would fetch. If you can make some repairs you can get a pretty good deal on an REO.
0 votes Thank Flag Link Sat Apr 14, 2012
There is no inherent difference between a foreclosure and a normal sale. What you are looking for is a good deal. REO foreclosures in many cases can have a lot of deferred maintenance and you will not get property disclosures from the seller.
0 votes Thank Flag Link Fri Apr 13, 2012
One pro is that you can generally close a transaction quicker than most short sales.
A con is that you will not get a history of that property that a normal physical seller can give you. Inspections are crucial in any transaction but even more so with an REO. Perform any and all inspections with qualified inspectors ( home,pest,roof,chimney, foundation, sewer lateral just to name a few) until you are satisfied with the results.
0 votes Thank Flag Link Fri Apr 13, 2012
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