What is the best way to purchase a foreclosure in San Francisco?

Asked by Eric Wu, Russian Hill, San Francisco, CA Wed Jul 20, 2011

I'm trying to find the best way to purchase a foreclosure in San Francisco, something similar to this listing: http://reo.wellsfargo.com/WBREODetails.aspx?INTCID=149144&am… Does the process have to be agent driven? Can you search foreclosures yourself? Who does the bank deal with?

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Greg Bryan J…, Agent, San Francisco, CA
Wed Jul 20, 2011
The best way to purchase a foreclosed property, I have found is to find an agent who specializes in Foreclosed properties or REOs. Note the foreclosed process is typically much longer than the normal purchasing process and can take several months.

I do not specialize in foreclosures or short sale properties, but if you want I am happy to put you in touch with some that do. Feel free to contact me.

Greg Bryan JD/MBA
Broker Associate
GB and Associates/McGuire Real Estate/Urban Bay Properties
(415) 640-4341
Web Reference:  http://www.gbandas.com/
1 vote
Lance King, Agent, San Francisco, CA
Thu Jul 21, 2011

You have some good information below, but a key point to be made is that having an agent/broker on board can not only make the difference on getting the right price and avoiding a building with issues, but the process of buying REOs is different and a knowledgeable agent/broker can make the difference between a deal completing or blowing apart.

A case in point:

We had a client who was buying a foreclosure in Pac Hts. There were several points along the way where without our help the deal would not have happened, and this is because we have dealt with these kinds of transactions, know what to expect, and know how to wade through the red tape to make things happen. An agent/broker who doesn't know how to do this could cost you money and/or the deal.

There are also foreclosures that you can buy at auction, but in this case you need cash, you are going up against veteran buyers, and there could be title or condition issues with the property.

Pick a really good agent/broker and you will be very glad you did. And as pointed out below, the bank is paying for it - take advantage.

Best Regards,

Lance King/Owner-Managing Broker
DRE# 01384425
1 vote
Matthew Goul…, Agent, San Francisco, CA
Wed Jul 20, 2011
Hi Eric,

Matthew again here. I also forgot to mention that this property is part of the Mayors housing program. Do you know about this ? It has many restrictions for buyers and sellers alike, and as a buyer you must qualify based on income limits and you must take the class and be certified to be eligible.

Either way, I would be willing to discuss how I can help.
1 vote
Seth Munter, Agent, San Francisco, CA
Wed Jul 20, 2011
You as a few questions:

- Does the process have to be agent driven? No. But the bank will pay your agent to help you, so there is no reason not to use one.

- Can you search foreclosures yourself? Absolutely! There are a number of good websites to help you find foreclosure properties.

- Who does the bank deal with? The bank usually deals with their own Realtor, or "listing agent." The process of buyer property from a bank is similar to buying property from anyone else, but I recommend you get an experienced Realtor who knows the process to help you avoid the pitfalls, negotiate the best price, and watch out for your best interests.

What is the best way to purchase a foreclosure in San Francisco? In my opinion, use a good Realtor.

Call a couple of Realtors (I would include myself, Seth Munter at 415-260-0900) and find out who you feel comfortable with and can trust. That Realtor can guide you through the process of understanding how foreclosure works and the best way to get the property that's right for you.

But REOs are not the only kind of foreclosure property. Here are some examples of different types of property that some people consider to be "foreclosure" properties:

1. Foreclosed property. After the foreclosure process is finished and a bank owns a property, it's called an REO. (Real Estate Owned by the bank.) This includes real estate owned by Wells Fargo, which is the example you give. Ask your Realtor if you can have the REO properties that meet your criteria emailed to you as soon as they are put on the market.

2. Trustee Sales. Before a foreclosed property goes to a bank that make the loan, the property can be offered at a Trustee Sale on the steps of City Hall. Ask your Realtor for coaching about the purchase process and requirements for these all cash auctions.

3. Pre-Foreclosure property. When an owner is behind on mortgage payments, that property is in default. Ask your Realtor to help you find listed and unlisted defaults.

4. Pre-Foreclosure Sort Sale property. When a pre-foreclosure property is worth less than the total of the loans taken out against the property it's called a short sale because the bank is going to come up short. That is to say, the bank will not be paid the full value of the loan. Ask your Realtor to about their experience with short sales to set your expectations on this process, which can take 3 to 6 months, or even as long as a year!

Good luck! It may take time and patience, but if your smart about it, you can find the right bargain for you.
1 vote
Matthew Goul…, Agent, San Francisco, CA
Wed Jul 20, 2011
Hi Eric,

Firslty this is an REO (bank owned), so the foreclosure process has already happened. I say this just to clarify the point as there is a big difference in buying a short shale that is under foreclosure proceedings and a REO.

Secondly, this property was marketed on the MLS as all Short Sale and Bank owned sale are. No lender will work on a sale without having it listed by a Realtor, being professionally marketed so as to get the best possible price. No one wants to give a property away for less than they could get. If they do then you are looking at possible lender fraud, and that means Jail time. Please dont waste your money on fake programs that offer you inside deals. You can go to auctions, but very few SF properties ever reach an auction and if you buy at one be prepared to pay upto 10% or more in commision on top of the sale price. Also, if you think about it, it goes to an auction because ther is a problem with the house or the area may have too much inventory.

In the end, no matter if you buy a Short sale, REO or Auction (it will have a reserve), the banks have had several agents or an appraisal to determine market value.

The long and the short - If you want to buy a home, get a professional to work with you. Good luck
Web Reference:  http://matthewgoulden.com
1 vote
Gary Belk, Agent, San Francisco, CA
Wed Jul 20, 2011
The best way to find and buy a foreclosure in San Francisco is through a Realtor. In the city most property sells quickly and there is not a glut of foreclosed properties to chose from. It's in your best interest to align yourself with a Realtor who can monitor the market. You may also want to consider a short sale or a property that is not distressed. Given that San Francisco is an active market properties sell for market value regardless of the status of the property. Good luck. San Francisco is a wonderful place to call home and be a homeowner.
Web Reference:  http://www.graybelk.com
1 vote
Don Tepper, Agent, Burke, VA
Wed Jul 20, 2011
The best way--pretty much the only way for most foreclosures--is through a Realtor. In most cases (there are a few exceptions with lenders who sell direct), a foreclosure is put back on the market through a Realtor. The property is listed on the MLS.

So, for most properties, your agent would search (probably with an automated search) for properties meeting your criteria, just as they would do for non-foreclosures. However, in many/most MLS systems (such as the one I have access to), I can specifically limit my searches to (or exclude from my searches) foreclosures.

Any properties listed on the MLS should be picked up by all the regular feeds--Realtor.com, Trulia, etc. So, pretty much you can search them yourself. The problem is that sometimes they go under contract very quickly. Meanwhile, it might take a few days for the information on your local MLS to make it to all the other sites. So I'd suggest both approaches: You look yourself on MLS-accessible sites. Many agents in your area, I'm sure, have that function on their sites. And those will be real-time. But I'd also suggest you work with an agent who can input your parameters (price, location, size, etc.) so that you'll be immediately notified any time a new property meeting those criteria come on the market.

The bank, in most cases, deals with the listing agent--the agent it's chosen to list the property. However, there will be multiple agents and it'd be better for you anyway to deal with another agent--a buyer's agent. So don't worry about which agent might be listing the property.

Hope that helps.
1 vote
Robert Krop, Agent, Frederick, MD
Tue May 26, 2015
I recommend getting a buyer agent to start your searches as they will have access to all bank owned properties and will be able to represent you in the purchase and make sure you are the most protected in your purchase.
0 votes
Rob Regan &…, Agent, San Francisco, CA
Tue Jul 26, 2011
Eric - as someone below mentioned the property you found was a "BMR" or Below Market Rate unit. So the price wasn't that low because it was an REO/foreclosure but because of the BMR restrictions.

Also, this property was listed on the MLS. And as many have pointed out, once a property fails to sell at auction on the court house steps, they usually find their way onto the MLS. My MLS site has a REO search option - click on the link below to try it out.

Short sales are also a search option on my site, and many call these "pre-foreclosures" with many others erroneously lumping them into the "foreclosure" category.

So the best way is to use the MLS to search for Short Sales and REO's.
Web Reference:  http://www.SF-MLS-Search.com
0 votes
Jase Williams, Agent, Lake Oswego, OR
Thu Jul 21, 2011
Find a local agent to represent you. It helps to be pre-qualified. Have you ever seen the movie "Money Pit?" An uneducated buy could get you a property that looks good on the outside, but could be a financial nightmare everywhere else....
0 votes
Dan Dodd, Agent, San Francisco, CA
Wed Jul 20, 2011
Hi Eric,

The process does not have to be agent driven, however, if you are serious about buying any property in San Francisco you are always going to be better off working with someone who has a track record of success and is living and breathing it every day. There are so many details associated with real estate in San Francisco that a miss step can result in significant cost to the potential buyer.

If you would like to discuss further at no obligation, feel free to reach out and let me know. Best of luck in your search in any event.


Dan Dodd
Coldwell Banker
0 votes
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