Who do I contact to buy a bank owned, or Pre-Forclosure home?

Asked by Flo, 94545 Mon Jun 9, 2008

I search the forclosure websites and found few Bank owned and pre-forclosure homes in Windermere,
San Ramon, CA 94582.
I would like to make an offer before these homes actually being forclosured and eventually being auction off.

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Ben Mills, Agent, Virginia Beach, VA
Thu Jun 12, 2008
Hi Flo,

I am a Virginia Beach agent so just keep that in mind but I would like to tell you what I might do if you walked into my office out of the blue and asked me this question. It may sound silly but I would probably ask you why do you want to buy a bank owned or pre-foreclosure (I am not sure if anyone had ever used that term before this market). In our market, many investors and wannabe investors, for that matter, have thrown in the towel because it is not as easy as it was just a year ago to sell the property. Furthermore, you still see these same people at the foreclosure sales just not as many of them which mean the "pros" are having a hard time. Am I saying it is not possible to find a deal? Absolutely not...but you may have to change your definition of "a deal." In addition, it will most likely take more time and/or effort than you would expect. Also remember, many full time investors pay cash.

Maybe that is not you at all. Maybe you asked because you are looking to live in the property as your primary residence. In this case, my advice would be to not buy your home because you saved a few dollars but because it is the best possible living arrangement that you could have made with the terms that you can manage. The best chance for success in this case would be to contact a local real estate professional. Do your best to explain what is important to you in a home such as its proximity to schools, jobs, entertainment etc. An agent will be able to narrow the search based on your criteria and save you alot of time and gas.

And finally, have your local agent do a market analysis on any home you buy. Just because they bought it for $800,000 just 2 years ago does not mean it is a deal at $790,000. Do not forget a home inspection. Depending on what type of foreclosure it is, there are specific procedures, disclosures, and paperwork that must be done properly. An agent will make sure you are covered. Best of Luck in Cali!
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Barbara Wils…, Agent, Danville, CA
Tue Jun 10, 2008
I have found that much if the information on these foreclosure websites is very old information, and the homes listed on them have actually already been purchased, or the loans have already been brought up to date.

You will save much time and effort by working with an agent, or searching realtor.com or trulia.com. If the owner or bank is selling the home, then the properties are listed on the multiple listing service, and you will have access to all homes in that price range, or size range that you are looking for - not only the distressed properties. I have the ability to send to my clients, as soon as it is listed, for example, only bank-owned, or only short-sale, or both types of homes, in whatever neighborhood you are looking for.

If you are thinking about trying to buy the home directly from the owner/occupier, there are a few words of caution. Many homes with a notice of default are able to make up the payments or work with the bank to not have to sell, so you could go to 20 homes, trying to get there when the owner is home, only to find that maybe one will consider your offer. The offer will have to be accepted by the bank, who is unlikely to sell directly to an interested consumer, when they can get more money for it by marketing the property to the largest number of people, that is, through an agent and on the multiple listing service. So you are back looking at trulia.com or realtor.com or getting the latest listings from all brokerages from someone like me. Call me if you have more questions. Good luck.
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The Hagley G…, Agent, Pleasanton, CA
Mon Jun 9, 2008

There aren't as many foreclosures as you think in Windermere...although there were a string recently in the townhouses on Watermill Road.

When you say you'd like to make an offer.....are you thinking you can pick these up for pennies on the dollar? That is a common mistake. I have both a townhome and a single family coming on in the next two weeks. If you want to give me an idea of what you're looking for, I am more than happy to get the info to your Realtor before they hit the MLS.
Web Reference:  http://www.cindihagley.com
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Shel-lee Dav…, Agent, Rolling Hills Estates, CA
Mon Jun 9, 2008

There are some great words of wisdom already spoken by the others who have answered your question. I cannot emphasize how important it is to work with someone who is experienced in this area, especially if you are considering pre-foreclosure properties.

Just to clarify, bank owned properties (REOs) have already gone through the foreclosure process and been auctioned off. The bank ended up owning them because no one bid enough to pay the bank in full (more was owed on the house that it was worth). The great thing about bank owned properties is that all junior liens have been wiped out and you know when you purchase from the bank that there will be no surprises regarding the final purchase price. And don't be mislead to believe that you can go directly to the bank and offer to buy an REO. Banks have a process they go through which ends up with the property being listed by a real estate agent and sold through the same channels as any other home on the market.

When you purchase pre-foreclosure properties, the home owner still owns the home. The loan that is in foreclosure will most probably NOT be the only lien against the property. If the 1st Trust Deed is foreclosing, there might be a 2nd or even a 3rd trust deed behind it. Also, there might be delinquent taxes, mechanic's liens or judgment liens to deal with. You want to make sure that your realtor does a very thorough job on their due diligence to figure out exactly what is owed. Also, you might find that the property will require a short sale (negotiations with the bank for them to accept less than what is owed on the property) due to the recent drop in home prices. Again, if your realtor and the listing agent are not knowledgeable in this area, you can find yourself in long drawn out process that may not result in you owning the home. However, with the right professional on your side, you might be able to get a great home. Just remember you will need two things along the way, patience and persistence.

Wishing you much luck in finding your perfect home and Dare to Dream.

Shel-lee Davis
Real Estate Consultant
RE/MAX Palos Verdes Realty
0 votes
Steven Ornel…, Agent, Fremont, CA
Mon Jun 9, 2008
Hi Flo,

Your best bet is to start working with a licensed Realtor or Mortgage Banker for identifying a distressed property. Realtors will have access to the MLS listing the Short Sale and Foreclosures, while a Mortgage Banker (and some Realtors) will have access to the Bank's own databases of REOs. I’m both a Realtor and Mortgage Banker.

However, while you might identify a Rose out in the Foreclosure garden, you should be fully aware of where the thorns are located that the media rarely covers when they are hyping these opportunities, as follows:

-- The process of buying a Short Sale/Foreclosure/REO (SS/F/REO) home is much slower (60+ days), and greater-than-normal documentation is required, as compared to buying from a private seller.

-- Most banks are notorious for NOT returning phone calls and obtaining status of the transaction is like shouting into a valley and not even hearing your own echo. In all fairness, Banks are inundated right now.

-- Only about 33%-50% of deals are actually accepted and close.

-- Water and/or electricity can be turned off, which makes it very difficult to confirm condition. There’s also not much effort to clean up or repair SS/F/REOs. They can be in pretty bad shape. Be careful of SS/F/REOs priced suspiciously low as the completed cost of the repairs may exceed the market value of the home after the repairs are done. Definitely consider finding a contractor you can trust and take her/him with you when you are viewing SS/F/REOs. True, some foreclosures are in better shape than others, and just when the excitement builds you realize you are going to be up against a 60-day bout of the Bank’s “silent treatment.” This is why many buyers “just say no” to SS/F/REOs, opting for a condition-verifiable, MLS listed home that is competitively priced.

If your stomach isn’t queasy and you want to move forward buying one of these properties I would suggest that you ask your friends and family for references of at least three people that have actually run the SS/F/REOs gauntlet.

On the other hand, if you are thinking, “just say no” and would like to find a condition-verifiable home that is competitively priced please give me a ring.

Best Regards,

Steven A. Ornellas, GRI, ABR, e-PRO, CMPS, RE Masters, MBA
REALTOR® / Mortgage Banker-Broker / Certified Mortgage Planning Specialist

Steven Anthony Real Estate & Financial Services
Cell: 510.461.6011 Skype: brokersteve
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Grant Alvern…, , Contra Costa County, CA
Mon Jun 9, 2008

I deal with both the buy and sell side of bank owned, and pre-foreclosure (or short sale) properties, and I'd be more than happy to answer any questions you might have regarding the whole process. Feel free to contact me if you'd like some assistance at the reference below.
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Wayne Sellers, Agent, Belle Mead, NJ
Mon Jun 9, 2008
Contact a local agent...Most foreclosures are listed with a broker and an increasing amount of pre-foreclosures are listed as well. Some signs that will tell you that a property is a pre-foreclosures are "subject to 3rd party approval" and "Subject to lienholder or Bank approval".

Some terms for foreclosures are " Bank Owned" and "Corporate owned"
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