Buying Bank Foreclosures
Question: I hear on the news about all the bank foreclosures and liquidation sales. How do you find these properties, and do I need an agent to buy one?
Answer: When it comes to Bank Owned Properties or REO homes (Real Estate Owned), there are a few approaches. It is always a better idea to be working with an agent, preferably one who has experience with the REO process, when looking at these properties. The buying public gets fooled into thinking that these homes are an automatic bargain, and that the banks are desperate to get rid of them. You still have to approach every single purchase possibility with the same scrutiny you would use to buy any other home. In fact, you need to be extra diligent. When a normal seller puts a home on the market, they are bound by law in the State of California to disclose any material defects that may affect the value of the property. This is not true for REO homes. The banks or lenders who own these homes have no knowledge of the condition, therefore they are exempt from most disclosure laws, and the burden then falls on the buyer to conduct their own diligence when buying these properties.
When entering into contract with the owner of an REO property, they generally allow only 7 days for you to conduct your inspection, and they insist on the buyer signing an addendum to the contract which requires the purchase to be completely "as-is" , "where-is" , and that essentially removes all the normal protections for the buyer in a standard purchase agreement. In other words, BUYER BEWARE!
So unless you are a seasoned and experienced investor, and you know how to do your own physical inspections, and you know how to obtain and interpret a title search to make sure their are no other leans against the property you intend to buy,
you should always use the services of a professional to protect you from the pitfalls that may be present in buying a foreclosure! Call ME!