Foreclosure in 95014>Question Details

Christy Oh, Home Buyer in Cupertino, CA

Hi, I am curious how a foreclosure works?

Asked by Christy Oh, Cupertino, CA Wed May 28, 2008

I look through trulia and notice a lot of foreclosures. How do I get an opportunity to look at these houses when they have no signs up saying it is for sale? What are the process to even get a foreclosure? Thank you in advance for answering my question!

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I agree with Roland. I purchased a foreclosure (closed in March). I tried purchasing at the short sale, but after four months the bank decided "no" even though the homeowner wanted to sell the house to us. We were too afraid of the legal concerns to buy the house at the courthouse auction. When it became an REO we jumped on it. We made an offer lower than our short sale offer and got the house. We closed in 32 days! The discount from the short sale offer to the price we purchased was 6%! If you believe, we got an incredible deal. Zillow shows that we got the house for 26% below market value. The house is located in Los Gatos, CA
Web Reference:
1 vote Thank Flag Link Sun Jun 1, 2008
Jennifer Kre…, Home Seller in 95124
Hi Christy - There are three ways to buy these homes. When a notice of default is filed, the home is in pre-foreclosure and may or may not be on the MLS. You should hire either a Realtor or a real estate attorney to help with this kind of transaction. Most of these are short sales, meaning the sale will not get enough money to pay off the existing loans. It is a long, difficult, and often disappointing process waiting for the bank to decide to accept a short pay. Secondly, when the legal foreclosure occurs, the property is sold to the highest bidder on the courthouse steps. Look for legal notices to announce sales. There is often no information available about these properties, so be careful. Also be aware that you must pay the full price in cash at the time of the sale. Finally, if the property reverts to the bank's Real Estate Owned (REO) Department, the bank will fix it up to minimum standards and sell it on the MLS, usually at a very attractive price. This is the best way to go, not only to get a reasonable price and timely close, but to also get all of the buyer protections provided by the real estate purchase contract.
Best of luck to you.
1 vote Thank Flag Link Wed May 28, 2008

As Roland rightly pointed out, there're three stages of the foreclosing process:

1. Pre-foreclosure (Short Sale): because most likely it's still owner-occupied, showings are often by appointment only. Some owners may not even cooperate, and you never get a chance to see it. The short sale process is indeed very loooong! Depending on the hardship current owner is going through, their short sale filing needs to be agreed & approved by the bank, 60-90 days of wait is quite normal, so you just have to be patiently awaiting and hope the bank approve your offer price & terms. Even worse yet, if two banks are involved (i.e. first loan and secondary), they it could easily double the wait time.

2. If the property fails to sell during short sale, then goes to public auction (usually announced ahead on local media such as SJ Mercury, Los Gatos Weekly, etc). If you win, you must pay all cash.

3. If still doesn't sell, then bank foreclose upon and takes over as REO (real estate owned), from this point on, it's very much like a regular sale: you don't have to wait for approval any more, if your offer gets accepted by bank's authorized asset management, you enter escrow and close just like a regular transaction. You can still have your inspection contingency, loan contingency, etc. And you can get pretty good deals this way. The major disadvantage to you as a buyer is: REO has very limited disclosure other than some basic geo-reports, because remember, bank just took over, they didn't know much about what happened on this property in past years, right? So hiring an experienced inspector is crucial, check it out top-down and inside-out!

You may easily search for REO/Short Sales on our website:

Feel free to contact me if I could be any help, good luck :)

Daniel Shi
1.888.785.8818 ext.100
0 votes Thank Flag Link Fri Jun 22, 2012
Hi Christy - I have to amend my earlier comment about the ease and safety of buying REO's. It really depends on the bank. Be wary of out of state banks that substitute their home state contracts for the standard contracts used in California. You may lose some of the consumer protections that we take for granted here in California, so it would be to your advantage to consult a real estate attorney in addition to a realtor.
Good luck,
0 votes Thank Flag Link Tue Jul 1, 2008

When the homeowner cannot make the monthly payment. The lender placed a notice of default.
The home owner could hire a realtor to sell the home. a lot of them it is a short sale case due to the homeowner owes more money then he can sell it. The realtor can nogiate with the lender(s) to get the offer accepted. If this process is agreed with the lender. The lender can auction it or place it as a bank owner property and lender or asset manager will hire a RE agent to sell it as a bank own property.
You as a buyer can hire a RE agent to buy it. Last two offers I know were all sold for over asking with 38 and 46 offers.
Grace Keng
Certified Residental Specialist
0 votes Thank Flag Link Tue Jul 1, 2008
Hi Christy,
What you really are looking for are Bank Owned properties. These have already forclosed and are at the last step. You get some of the best deals with the least risk this way. If you would like a search for bank owned properties drop me an email with what you are looking for and where. I will set it for you so you can see whats available and go from there. This is all done for FREE!!!
Allyson Alessandrini
Web Reference:
0 votes Thank Flag Link Fri Jun 6, 2008
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