Home Buying in Anaheim>Question Details

Chrisine, Home Buyer in Orange County, CA

Purchase Financing

Asked by Chrisine, Orange County, CA Sun May 4, 2008

100K down payment on 299K townhouse.
800 FICO
110K annual income
15 years job history
0% DTI

How do fees work when purchasing an REO? Is it different from a conventional purchase of a home that is not in distress?

What's the difference during the purchase process between a privately owned or brokered home and a bank owned property?

What questions should I ask when dealing specifically with an REO purchase?

What is the bank/agent willing to cover if a buyer is an extremely strong candidate ready to buy immediately?
- appliance replacement (broken/damaged microwave, range, dishwasher), toilet and sink replacement, plumbing inspection and repair (leaking faucets and showers), fresh paint, basic cosmetic and house keeping prior to move-in.

Help the community by answering this question:


Dear Chrisine,

You sound like quite a savvy investor in a great position to buy.

When you ask about how fees work, they are generally the same as any other closing.

The process is similar, except for a few differences. For example, when submitting an offer on an REO there are usually a few channels one would have to go through to get acceptance on an offer. However, cooperation between agents is key in these types of transactions.

For information about REO purchases, which I specialize in, I would like to refer you to my website. Click "I'm a Buyer" and follow the menus and you will arrive at some very interesting and useful information regarding REO purchases.

Regarding financing, I have found that many buyers look to their Realtors for lending and financing advice. I believe that this causes many miscommunications and misunderstandings. While Realtors certainly have lots of experience in these matters, they are not technically trained to handle and answer your questions. For this reason, I have worked very hard to establish a solid working relationship with a Direct FHA Lender and as a result, have a dedicated representative at the Lender. My dedicated rep treats my clients with the utmost care and concern and makes himself available for them around the clock. I also have a very close working relationship with a home decorator who is a licensed contractor and offers estimates and consultations.

Please feel free to contact my rep at the Lender, whose information I have provided below. Make sure you let him know that you are a Crestico Realty referral so that I can personally guarantee the level of customer service you receive.

Houtan Hormozian
American Guardian Home Loans

Thank You!
Web Reference: http://www.crestico.com
0 votes Thank Flag Link Sat Apr 4, 2009
Christine -

1. Escrow and closing fees will be the same.

2. There is no fundamental difference in the process between buying a bank owned property vs. any others. You will find a difference, however, in that the banks will usually attach a two to twelve page addendum to your purchasing contract stating various things such as contingency timeframes, as-is language, deposit requirements, and so on (each bank will be different).

3. The main questions you will want to ask are those regarding the condition of the property. You will answer those questions yourself by hiring an inspector to thoroughly investigate the property. Since foreclosure properties are exempt from the normal disclosure laws, the onus is on you, the buyer, to find out everything.

4. As others have said, a bank will generally do nothing to repair things for you. For someone extremely qualified like you who is offering a fair price, the bank might be willing to credit you money for closing costs. It all comes down to net sales price to the bank on what they would give you.

If you need more information, click my profile and send me an email.

Mike Crowley
0 votes Thank Flag Link Tue May 6, 2008
Hi Christine,

My husband and I have bought two REO properties in the last 6 months. The first one had been on the market 4 months and had gone through a series of price reductions and they were not willing to make any concessions. However, they did all the secion 1 termite repairs, professionally cleaned the home and had all debris taken away.

The second one we offered the initial asking price with $5K back towards closing costs. They were willing to do it, however it ended up in a multiple offer situation so in one of our counters we took the closing costs out. When it came down to the termite, they wouldn't budge on $85 for section 1 termite repairs. The hauler missed a bunch of stuff and they won't finish removing it so our agent is taking care of it.

With REO's the banks consider them as is where is, meaning that they don't want to do any repairs. If they price the property aggressively, it will likely end up with multiple offers. Your best bet is to give them the best price factoring in repairs and having those done yourself. If you have them do things, the listing agent handles it and you don't always get the best work.

You will want to submit a copy of your preapproval letter with your offer, otherwise they won't even consider it. If you want to make yourself more competitive to the bank, change the standard inspection period from 17 days to 7 days and offer an escrow of 30 days or less.

Not only is every bank different, but there is also variation within the banks depending on the particular asset manager assigned to it. I'm not sure if it was the asset manager or the bank, but I found Citi more difficult to work with than WAMU.
0 votes Thank Flag Link Tue May 6, 2008
Hi there Chrisine. There are many different answers to your questions. Bank owned properties are a liablitity fora bank and they cost them money so they want to sell them as soon as possible. A strong candidate will get the home if you have fully prepared your offer and packaged it in a way that make you stand out from the others. There are various ways to do to this .
The Fees are similar,
A Private owned brokered home usually has emotion attached to it. The seller may have lived there some time, possibly raised a family there, may have invested heavily in the home. So there is emotions here.
A bank looks at house very differently, yes they want to cover the debt but usually thay are unwilling to make any repairs. Thay are usualy offered in "AS IS" condition.

If you would like more information about how to buy a REO plese let me know. I can be reached via e mail or call me (714) 552-6817
Kind Regards
Michael Barron
First Team Real Estate, REO specialist
http://www.ntustinhomes 4sale.com
(714) 552-6817
0 votes Thank Flag Link Sun May 4, 2008
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