Any help with buying REO/ Bank owned properties ?First time buyers.

Asked by Melissa, Roseville, CA Mon May 12, 2008

First time buyers. Engaged couple with wedding around thecorner (Next summer)eagerly looking to buy. Would like to stay in Roseville, CA good FICO and firm co-signers ready to proceed TODAY ! Any help would be great ! :)

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Kathy Dyer, Agent, Roseville, CA
Mon May 12, 2008
Hi Melissa,
How exciting about buying a new home. We love helping first time home buyers. We were overjoyed to just do that, our new home buyers just had their 1st baby as well!
Here is a list of what you need to know!

1. GET PRE-APPROVED- Savvy buyers get pre-qualified if not pre-approved. If you are not pre-approved yet- make sure you do. If you do not know a good lender, ask your Realtor since they know who is good and will provide a smooth transaction. Most, if not all banks require a pre-qualification letter when you place an offer. Your offer will not be accepted or even considered without one. Most Realtors will not show you homes without a Pre-qualification letter. Find out what first time home buyer program you qualify for. I work with great lenders who are very savvy and knowledgeable about all the fist time home buyer programs. Get referrals and get it out.

2. GET EDUCATED- By working with a Realtor, they can educate you about the home buying process. Once you find the right home, you will have to act fast. Remember the early bird gets the worm. You will need to know what payment you feel comfortable with, what your closing costs will be, and are you willing to pay any HOA or Mello Ross? Only your lender and Realtor can help you with that. Also find out if your realtor you are considering knows the REO trends and statistics within the price range you are interested in.

3. PUT AS MUCH DOWN AS YOUR CAN- An offer with the highest price is not always the best offer. Banks these days are looking for a strong buyer that has no problem qualifying and will not fall out. A buyer that has a 100% loan is considered a weaker qualified buyer than a person who puts down let's say 20%. So if you are putting less down and want your offer to be taken seriously, what should you do? Your Realtor will help position you for a better offer when making the offer. Writing the right offer is an art in these days.

4. SHOW VERIFICATION OF FUNDS. Make a copy of where your down payment is coming form, a bank statement, Black out any personal account info on it. You can also have your bank write up a letter for you as well. This will make you look stronger and prove you are a ready buyer.

5. MAKE YOUR OFFER A CLEAN ONE. Usually banks sell the property as is. Don't ask for repairs. It is always best to keep your contingencies as short as possible.

6. MAKE IT YOUR BEST OFFER UP FRONT. You will be in competition with other offers, so if it is a good home, it may be priced lower to encourage bidding wars. I called about a home the other day that had 23 offers on it.

7. MAKE YOUR OFFER ASAP. In some cases I see homes go pending the day the house comes on the market. How does that happen? Some investors actually buy homes sight unseen. They have their Realtors scout out the homes and then make multiple offers and see which ones stick and which ones don't. So if you are a first time home buyer, you are competing with those savvy investors that act fast. So take action. Know the market and what you want- check out the homes in the areas you want to live in. Once you know what you want, what you want to pay, what your closing costs will be, then you qualify to actually buy a home. Make sure you are working with an agent right up front. They will help you go in the right direction. Finding homes on your own will not help you, the early bird will get the worm on all the great homes.
8. Work with an agent that will make you feel comfortable to work with and that will educate you along the process. Someone that has your interests in mind. Someone who will take the time to get to know your likes and dislikes and has the experience to help you narrow down your search. If that sounds good to you, feel free to call us and ask us questions,

Kathy Dyer &
Christine Sturgis form the "Home Team Girls"
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3 votes
Don Tepper, Agent, Burke, VA
Tue May 27, 2008

However, I strongly disagree with the advice below. Prequalification is not the first step. Nor is it the second step. That's like--to use a wedding analogy--sending out the invitations before you have the church. Or even before you have the groom.

The first step probably should be to talk to one or more experience Realtors about the process of buying REOs. It can be a slow, frustrating, and unpredictable process. You might find your "dream" house, and lose it to another buyer...and never even have full confidence your offer was presented. (Check some of the other threads here on Trulia.) Or, more likely, consider that you're ignoring 95% of the homes on the market today. Maybe that little cottage with the white picket fence is out there, but it's not an REO. It's just a good deal, being sold conventionally. Why eliminate 95% of your options?

Before you found your fiance, did you say, "I'm only looking for left-handed lawyers" or "I'm only looking for a Libra." Of course not. So why limit your house search to REOs? And if you do, as I said, make sure you understand all the pitfalls of the process.

Second, narrow down the type of home you want. Before you got engaged, maybe you had some idea of the type of guy you wanted: athletic, good sense of humor, between 22 and 29, for instance. Well, do the same thing for a house.

The first step you should take in buying a home is determine what you want in the home. Make three lists: (1) What you absolutely must have; without it, you won't buy; (2) What you really want in a house; without it, you probably wouldn't buy; and (3) What you'd like in a house. Then set the third list aside. Focus on the first one, and see if you can move any of the items into List 2 or List 3.

Different people will rank their priorities differently. If you had 4 children, maybe 3 bedrooms and 2 baths is an absolute priority: List 1. Same scenario, but 4 bedrooms, 2.5 baths might be on List 2.

If you're planning on having children, maybe being in a good school district is an absolute priority: List 1. If not, then a good school district (if it makes your lists at all) would be List 3.

Now you analyze the list. Some of the same examples as above: Good school district if you plan on children. OK, but do you (or will you) earn enough to send your kids to private school? If so, then maybe the school district drops to List 2. Are you an advocate of home schooling? If so, again, perhaps List 2.

Fenced yard for dogs: If you have dogs, you might put that on List 1. Well, if it's not fenced, could it be? If you could fence the yard, then it's not really List 1. It'd be List 2 or List 3.

Affordability: You will not spend over $3,000 a month on PITI, even if you qualify for more, because you don't want to be "house rich, cash poor." That's List 1. But $3,000 still would be uncomfortable; you'd really like to spend no more than $2,700. That's List 2. And if you could spend less--say $2,500 a month--you'd be able to do some things you really love, like travel. That's List 3.

You go through all conceivable variables: Size of house. Condition. Location. Commute distance. Taxes. Climate. Affordability.

You should have a fairly short List 1, a longer List 2, and a longer List 3. This is your (or your family's) list of priorities.

Then you can contact a Realtor and a mortgage broker. A Realtor will help determine the price range for houses that meet the criteria on List 1. The mortgage broker will determine whether you can qualify for houses in the price range on List 1.

It makes no sense to contact a Realtor before you know what sort of house you're looking for (except to explain the advantages and disadvantages of REOs). So, your lists of priorities must come first.

Although it makes sense to contact the mortgage broker before the Realtor, both those steps must follow the development of your priority list.

So what happens if you develop the priority list, the mortgage broker determines what mortgage you'd qualify for, and then the Realtor delivers the bad news that you can't afford the properties on your list? First, you re-examine your list to make sure that all the items on List 1 really are absolutely essential. But if you've done this exercise properly, they probably are. You seek the mortgage broker's advice on what steps you'd have to take to qualify for the home that satisfies List 1. Maybe it's paying off some debt. Maybe it's staying at your job for another 10 months. Then weigh that advice. Can you do it? Do you want to do it? If it means living on pasta for the next year, maybe you decide that you'd rather continue renting.

Or you start thinking outside the box. Now, the mortgage broker may have had some suggestions, such as a co-signer or an equity share arrangement.

I'm out of space, but I hope you understand the order I'm suggesting you follow. And, just as important, why.

Good luck.
2 votes
Steve Ostrom, Agent, Roseville, CA
Mon May 12, 2008
Hello Melissa! Congratulations on the engagement. Have a pre-qual letter ready to go. Know that many financial institutions require pre-approval through their specific institutions (this does not mean you have to use them). REO/bank-owned transactions often have shorter inspection periods. Banks are not privée to pre-existing conditions that may or may not exist in relationship to the REO home/property. Inspection become even more important with no seller to take part in disclosures of what may or may not have transpired on the property. Many of the well-priced bank-owned (REO) homes require your prompt attention with an offer particularly in parts of Roseville that may be highly-targeted. Equip yourself with some patience, focus on the functionality of the home and your price bracket and keep communications lines strong with your agent so you can be ready to jump if that right home shows itself today or tomorrow. • 916-308-2446
1 vote
Maria Avdalas, , Sacramento, CA
Wed Jul 2, 2008
All Reo/Bank properties in order to submit the offer and have the offer looked at, you must send a copy of a bank prequalified letter and proof of funds. Banks do not want to waste time looking at offers of people that are not qualified. If you want to be competitive in this market, I can recommend a great loan officer that I recommend to all of my clients to get you qualified. Also on some of the bank owned properties lately, they are requiring that the buyers also qualify with there bank in order to verify that they buyers are really qualified. Buying a home can be overwhelming, but if you work with someone that has experience in this REO market and is quick to work with you in getting the home you want, you will do great. Please call for more information.
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0 votes
Robert Flood…, Agent, Roseville, CA
Fri Jun 6, 2008
Congratulations First Time Home Buyers! Melissa, I believe now is a great time to Buy! Don't just limit your options to REO/Bank owned properties. Select a Realtor that will look out for your best interests and help you understand all your options. Just handed over the keys to another soon to be wed couple on their first home! You too can achieve this goal. My Best, Robert Floodman Coldwell Banker Residential Brokerage.
0 votes
Debt Free Da…, , 85260
Tue May 27, 2008
Your first step is to get prequalified. There may be things that you need to do to get yourself in a position to buy. Easier to do now that to try and scramble at the last minute.
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0 votes
Manuel, , Roseville, CA
Tue May 27, 2008
Congratulations! This is a big and exciting step together. The first thing you need to do is get pre-approved. If you are serious about buying, being pre-approved gives you more of an advantage over other buyers. If you are interested in purchasing REO or Foreclosed properties, you will definitely need that first. A bank usually won't look at an offer if the Buyer isn't pre-approved. Second, you are going to need to work with an experienced Realtor who has dealt with these types of transactions, as they are very different than purchasing a normal home on the market. Since you are a first time home buyer, you can apply to certain city and county funded programs that can assist you with down payments and even lower rates in certain areas. This would be something to discuss with your lender. You can call me, Manuel at 916-526-2873 for assistance in getting pre-approved and to get in touch with an experienced Realtor who understands this process. Once you find the house you want, it's important to have a strong offer. ESPECIALLY if you are purchasing an REO or foreclosed home. Banks like to see pre-approval, down payment, short contingency periods and/or quick close of escrow, depending on what you can do. The best thing is to be prepared.
0 votes
Amy Wall, , Rocklin, CA
Mon May 12, 2008
Hello Melissa,
As mentioned below, have a prequalification letter for your offer price ready to go. Bank owned properties that are well priced in Roseville and Rocklin are selling very quickly and many times with multiple offers. You really need to have an Agent that you trust and that has experience in working with REO's. There are several issues regarding title that can affect the sale of the home that many people are unaware of, including the Agents. You will need to be prepared to look at homes as soon as they come on the market, and be prepared to write offers the same day on some of them. The banks control the escrow process, therefore, many times they will limit your time to complete inspections. Therefore, you need an Agent with resources to get those inspections and reports done timely as to not risk your deposit. The banks are also not required to provide disclosures, therefore, you will need a trusted Home Inspector, who in my opionion should be a licensed contractor, be your eyes for the property. Lastly, interview your perspective Agents and ask them how many REO properties that they have sold and make sure that they know the market place. I have sold several REO properties in the Roseville and Rocklin area, and I am happy to help.
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0 votes
Alex Amaro, Agent, Sacramento, CA
Mon May 12, 2008
Good afternoon Melissa,
I just helped a young couple close on a property that was in a very similar situation to yours. Instead of telling you about the experience myself, I have asked them if they would give you feedback on how I was as their agent. I would appreciate the opportunity to interview with you and give you my references and testimonials in person. Just remember, you should find an agent that will meet your needs as a buyer because my profession is SERVICE based. This means that your agent has to meet your needs and give you the proper education.
Have a great day!
-Alex Amaro

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0 votes
Carl Henker, , 95928
Mon May 12, 2008
Your first step in shopping for a home is to be pre approved for a home loan with a lender of your choice. With loan programs changes occuring almost dailey you need to know how best to plan your purchase and establish a price range in which to shop for a home that is affordable. The pre approval will let potential sellers know you are qualified to purchase thier home. Good Luck
0 votes
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