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Foreclosure in El Monte : Real Estate Advice

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  • Local Info4
  • Home Buying8
  • Home Selling0
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Activity 3
Sat Dec 20, 2014
Diane Christner answered:
There are several ways to purchase a foreclosure property - through the sales offered at the clerk of court website, foreclosure auctions (typically on the Internet) or through your agent and the local MLS, where many REO properties end up being listed.

Many Clerk of Courts have foreclosure bidding information available on line. Typically you will be required to preregister, bidders are required to show proof of financial ability to purchase and meet the other bidding requirements.

My best advice before attempting to bid on foreclosure properties online is to wait until you are much more familiar with the process and the pitfalls of purchasing properties at these kinds of sales as they can end up becoming a very costly mistake if you don't know what you're doing. For example, the winning bidder for the property also assumes liability for things such as code enforcement liens. Before buying a property at a court sale, find and hire a competent real estate attorney to do a title and lien search on the property before you bid on it. You also typically don't have an opportunity to do inspections or have access to the property before bidding, so what you get may not be what you expect. These homes typically set for a period of time without utilities or maintenance and are frequent targets of vandalism by previous owners or others who strip the homes of appliances, toilets, copper wiring, AC units - pretty much anything that isn't nailed down and sometimes things that were.

When banks have already foreclosed on the properties and placed them for sale, they are typically called bank owned or REOs. REOS are usually listed through a designated real estate agent and the MLS, so you can go through your agent to make bids on these listings. Buying REOs still provides for some risk to the buyer. While you will probably write your offer on a standard purchase contract form, the banks almost always counter back with their own addendums that change a good portion of the contract terms. They typically do not allow any changes to their counteroffers -- accept their terms or move on to another property. I always recommend to buyers that they should have a real estate attorney look over the bank's terms and make sure they understand those terms before signing. REOs are typically sold "as is." You can have inspections of the property but the bank will not make repairs. You will be required to provide proof of funds up front, when submitting your offer.

Condition of the property is often an issue with REOs as with the auction properties I mentioned above. Lack of utilities and maintenance do eventually take a toll on homes. Some banks have asset management companies come in and "freshen" up the properties, usually with paint and floor coverings and appliances. Other's don't. When buying an REO you will get the opportunity to do inspections during the specified time period to determine if you want to go forward with the purchase or cancel.

There's no rule of thumb on what the bank's bottom line is on price. Just as with any other real-estate purchase, you have to look at the recent sales prices of comparable properties, or "comps." You should look at the comps based on current market conditions and write a competitive offer based on that. Sometimes the bank prices the homes really low, and the home will have multiple offers over list price within hours. Sometimes it's priced too high, and you can make a lower offer. Your agent should be able to provide you with comparable sales before you write up an offer on a REO property.

Buying a bank owned property can take more effort on your part, but the financial rewards can make it worth the extra work. Find an agent that is experienced in REO transactions to guide you through the process.
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Tue Sep 1, 2009
Jose R. Reyes answered:
Many times you'll never hear any response. Properties are being hit hard with multiple offers right now. The banks are usually only looking at the top 3 offers and disregard all others. Of those 3 top offers, they may hear the YES or NO. All the other offers many times get thrown on a pile and never get any attention what so ever. Usually the REO agents don't take the time to call or e-mail the 20 other offers that weren't strong enough.

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Fri Feb 15, 2008
Dot Chance answered:
Hi, Veronica. On the other hand, an REO can be a diamond in the rough! REOs can be good buys, but you must have all the inspections done and don't let anything slide by. You can offer whatever you want to. These homes that have been on the market for over 100 days are more likely to look at a lowball offer than one fresh on the market.

Let me know if I can be of assistance!
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