Buying foreclosures and REO homes and condos – What you must know
Buying foreclosure homes and condos or Real Estate Owned (REO) properties can be a great way to invest in real estate at a significantly reduced price. The current economic crisis has resulted in many mortgages unfortunately ending up in foreclosure and, wherever you look, you will find hundreds of opportunities that you can take advantage of.
However, the fact that you are buying foreclosures or bank owned property does not automatically guarantee you a good deal. If you want to win at this game, you need to keep your wits about buying and know what pitfalls to avoid. Needless to say, your best bet is to team up with a competent and professional Realtor who can guide you and watch your back all the way through.
If you are looking for foreclosures, commercial or REO properties for sale in California’s Bay Area, Silicon Valley, South Bay or East Bay, just search through our REO listings to find the best deals. Also, contact Israel Gonzalez today, and put our expertise to work for you!
Read on to learn about the three different ways to buy foreclosures and some of the things you should be looking out for before you take the plunge.
Real estate owners who are having trouble with their mortgage will often try to sell their property as a pre-foreclosure, before the bank moves in and forecloses on the mortgage. If you are looking at pre-foreclosure homes, commercial or condos, you will be able to conduct a title search to find out if the property is subject to any other mortgages or liens (legal claims against a property). If any exist, they will become your responsibility once you make the purchase.
You will also have the opportunity to inspect the property and make sure that you don’t find any surprises in the form of any damage or pending repairs that could knock a huge chunk out of the money you have saved on the purchase price.
Once you buy a pre-foreclosure property, you sign a deed with the owner and take possession of the property, as well as responsibility for the mortgage and any back payments owed.
Buying foreclosures at auction - not for the faint-hearted
Real estate auctions of homes and condos carry a high level of risk because you are not typically allowed to inspect the foreclosed property before you make a bid. Remember that the previous owners may have not maintained the property well, or possibly even vented their anger at losing their home by vandalizing the property before moving out. Besides, you may find that the home you have purchased is still occupied and have to foot the bill for the eviction process yourself.
It is also very difficult to get a pre-approved loan to pay for an auction property because banks will not grant a mortgage without being able to appraise the property first. This means that you will need to have enough capital in hand to pay for the auction property in full.
While it is true that you can find good deals at real estate auctions, buying foreclosures at auction is only recommended for seasoned investors who know what they are doing and who are capable of assuming the financial risks involved.
REO (or bank owned) property – the safest way to get a bargain
The safest way of buying foreclosures is to buy what are known as Real Estate Owned properties (REOs), or bank owned properties. These are foreclosed homes and condos that banks are selling through a licensed broker, and tend to be in much better condition than other foreclosure properties for sale.
When you are looking at REO homes and condos, you are given full access to inspect the properties and request the necessary title searches to make sure that everything is in order before you buy. This means that by doing the proper research, you can find out exactly what you are getting and avoid unpleasant surprises further down the line. Another advantage of buying REO or bank owned property for sale is that you are able to make the purchase subject to your obtaining a mortgage, so that you avoid the risk of ending up owning a property that you cannot pay for.
At Beale Properties, we specialize in bringing you the best REO property deals in California’s Bay Area, Silicon Valley, South Bay or East Bay. Search through our REO listings or just contact Israel Gonzalez and we’ll help you find the great bargain you’re looking for!