Buying REO property or a foreclosure in Torrance?

What's an REO?

"REO" or Real Estate Owned are properties which have been through foreclosure that the bank or mortgage company currently holds. This is not the same as real estate up for foreclosure auction.

If you buy a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees added during the foreclosure process. You must also be willing to pay with cash in hand. To top everything off, you'll accept the property completely as is. That possibly could include existing liens and even current tenants that may require expulsion.

A bank-owned property, conversely, is a much cleaner and attractive proposition. The REO property was unable to find a buyer during foreclosure auction. The lender now owns it. The lender will take care of the removal of tax liens, evict occupants if needed and generally plan for the issuance of a title insurance policy to the buyer at closing.

You should be aware that REOs may be exempt from standard disclosure requirements. For example, in Texas, it is optional for foreclosures to have a Property Disclosure Statement, a document that normally requires sellers to tell you about any defects of which they are informed. By hiring Crown Realty and Financial, Corp., you can rest assured knowing all parties are fulfilling California state disclosure requirements.

Am I assured a bargain when buying an REO property in Torrance?

It's frequently thought that any foreclosure must be a steal and an opportunity for guaranteed profit. This simply isn't true. You have to be very careful about buying a repossession if your intent is to make a profit. Even though the bank is usually anxious to sell it soon, they are also motivated to get as much as they can for it.

When pondering the value of a foreclosure, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale. The bargains with money making potential exist, and many people do very well buying and selling foreclosures. But, there are also many REOs that are not good buys and may not be money makers.

Time to make an offer?

Most banks have staff dedicated to REO that you'll work with in buying REO property from them. Usually the REO department will use a listing agent to get their REO properties listed on the local MLS.

Before making your offer, you'll want to contact either the listing agent or REO department at the bank and find out as much as you can about their knowledge concerning the condition of the property and what their process is for taking offers. Since banks almost always sell REO properties "as is", it's often prudent to include an inspection contingency in your offer that gives you time to check for hidden damage and retract the offer if you find it. As with making any offer on real estate, your offer may be more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.

Once you've presented your offer, it's customary for the bank to counter offer. Then it will be your decision whether to accept their counter, or offer a counter to the counter offer. Your deal might be settled in one day, but that's rare. Since offers and counter offers usually give the other party a day or longer to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer. Crown Realty and Financial, Corp. is accustomed to these situations and will work to ensure there are no undue delays.