Bank owned homes, usually foreclosures, are also called REO’s.  REO is a term that actually means “real estate owned”, and is an old term the banks have used for years to describe the homes they have taken back in foreclosure.  In the past this term was used by a very small segment of the real estate world, but as we all know now, has become (along with short sales) at least 50% of the homes now sold in the United States.  Below is a short (and we think funny) video that highlights some of the things you should know about purchasing a REO or bank owned home.

Click here to view the embedded video.

We have written about Bank Owned homes for sale in the past, and now a quick update on what’s happening in the REO home sales world right now.

Now over 50% of all the home sales in San Diego and North County San Diego are either REO or short sales.  As the home market deteriorated, banks confessed their wrongdoings, and people scrambled to somehow avoid a huge loss of equity, the market began to sink, stabilized, and has now come to rest on a Greek island with the water being pumped out just about as quickly as it leaks in.

The biggest difference from two years ago is that the banks have developed and staffed for the number of homes that they have taken back in foreclosure, and now they mostly list with certain real estate companies that know how the bank operates and what they will do to complete a sale of any of their homes.  With that experience and staffing, REO or bank owned homes are now much easier to buy if you work with an experienced short sale and REO real estate agent.  As the video above explained in brief, you still have to pay attention to what you should expect in terms of risk or lack of disclosures with bank owned homes, but with good guidance these homes are often priced at the lowest end of the market in just about any area of San Diego.

If you want to look at REO, bank owned or short sale homes, just click above on “I would like to see homes that are….“, and once you’ve picked an area, just go ahead and register.  Once you’ve done that you’ll be able to select ONLY REO homes to search for, and I think you’ll find this a great tool to learn about bank owned/REO homes that may be of interest to you.
By Don Reedy
 

Buy This Home In Vista

Here’s how to buy this home:

This is a short sale.  Short sales mean that the seller of this home generally owes more to the bank than what the home will sell for.  The owner of the home goes to the bank and asks permission to try to sell at a price that is usually much, much lower than the amount the owner paid for the home.  Therefore, with this home, the asking price of $675,000 is an estimate by the owner of what buyers just like you might pay.

Before we try to buy this home it is absolutely necessary that we are preapproved with a lender.  The owner will not submit our offer to  the bank unless we are approved in advance for the prices we are willing to offer.

Once you’re approved, then let’s make an offer.  You must be willing to wait for an answer back from the bank on whether they will accept your offer or not.  AND, our offer will have to be “AS IS”, meaning that the bank usually is not willing to do any work (including paying for termites) in a large number of cases.

Let’s make an offer on this home

Fill in the form below.  We’ll get back in touch, make sure you’ve got a great lender and a preapproval, and then go see this home.  AND, if this home isn’t exactly what you want, then we’ll make sure you have lots of other options to consider.

[contact-form 1 "Contact form 1"]

Things You Must Know About REO

Bank owned and REO homes – Defined

Generally speaking a bank owned home, otherwise known in the real estate industry as an REO, is a home that has been taken back by the bank after the owner has defaulted on their loan.  The foreclosure process is a complicated and lengthy one, with many financial, social and tax issues to contend.  It is important, then, to work with highly skilled professionals when buying a bank owned or REO home, since many of the contract and financial issues are much different than in a standard real estate sale or transaction.

Want to Buy a Bank Owned?  — Do this First!

See a lender.  Nothing is more important.

Remember that the banks are interested in numbers, cash, financing, and almost nothing else. If you are going to compete with other potential buyers, you must be financially prepared.
You do not want to lose a home because you are not prepared. If you’re wondering why I’m a pretty darn good Realtor, then this is one of the reasons. I will help you get prepared, because to buy a Bank Owned or REO nothing else is more important.

Take the First Step Toward Buying A Bank Owned or REO

Call Don Reedy with Real Living Lifestyles Real Estate today at 760-802-9713.  Get qualified with a great and knowledgeable lender, and then move ahead with using all of our SEARCH TOOLS to find your home.

Showing properties 1 - 10 of 500+. See more city of Oceanside real estate.
(all data current as of 5/22/2012)

1. $501,000 : 1050 Straightaway Ct, Oceanside
   
   5 beds, 4 full, 1 part baths

   Home size: 4,461 sq ft

   Lot size: 1.35 ac

   Year built: 2006

   Days on market: 1
2. $310,000 : 1608 Calle Las Casas, Oceanside
   
   3 beds, 2 full, 1 part baths

   Home size: 1,817 sq ft

   Year built: 1992

   Days on market: 1
3. $329,900 : 5376 Gooseberry Wy, Oceanside
   
   3 beds, 2 full, 1 part baths

   Home size: 1,576 sq ft

   Lot size: 4,361 sqft

   Year built: 1988

   Parking spots: 4

   Days on market: 1
4. $325,000 : 112 Monroe St, Oceanside
   
   4 beds, 2 full baths

   Home size: 1,602 sq ft

   Lot size: 8,400 sqft

   Year built: 1974

   Days on market: 1
5. $179,900 : 330 Isthmus Wy 37, Oceanside
   
   2 beds, 2 full baths

   Home size: 942 sq ft

   Year built: 1994

   Parking spots: 2

   Days on market: 2
6. $462,000 : 5047 Palermo Dr, Oceanside
   
   5 beds, 3 full baths

   Home size: 2,545 sq ft

   Year built: 1992

   Days on market: 2
7. $429,000 : 306 Boomvang Ct, Oceanside
   
   4 beds, 2 full, 1 part baths

   Home size: 2,156 sq ft

   Year built: 1983

   Days on market: 3
8. $250,000 : 3369 Tonopah St, Oceanside
   
   3 beds, 2 full baths

   Home size: 1,682 sq ft

   Lot size: 8,470 sqft

   Year built: 1987

   Parking spots: 4

   Days on market: 3
9. $144,000 : 910 Royal Tern Wy, Oceanside
   
   2 beds, 2 full baths

   Home size: 1,050 sq ft

   Year built: 1979

   Parking spots: 2

   Days on market: 4
10. $79,900 : 200 N El Camino Real 60, Oceanside
    
    3 beds, 2 full baths

    Home size: 1,392 sq ft

    Year built: 1971

    Parking spots: 2

    Days on market: 4

Listing information deemed reliable but not guaranteed. Read full disclaimer.

]]> http://sandiegoequityfacts.com/see-a-lender-first-to-buy-reo-homes/feed/ 0 http://sandiegoequityfacts.com/fear-a-short-sale/ http://sandiegoequityfacts.com/fear-a-short-sale/#comments Wed, 14 Apr 2010 13:30:10 +0000 Don Reedy http://www.buyhalfahouse.com/?p=205 Read More »]]>

I am updating this post that I first published in 2009. Since that time various attempts by the government to step in and fix the mortgage situation has resulted in what appears to me to be an abject failure. Borrowers who were deceived continue to be discounted. Borrowers who tried to take advantage of the system find themselves the recipient of one after the other bailout attempt. Folks who need answers continue to get a flood of opinions, none of which will solve the problem, but all of which continue to extend the pain.

Why You Should Fear a Short Sale

If you’ve found yourself in peril of losing your home, and then discovered yourself in a conversation about “short selling” your home, then pay attention to this!

In a nutshell, a short sale is where the owner of a home goes to their bank and says in effect “we are a hardship case, and we can no longer pay our mortgage.” It is usually the case that the amount stilled owed by the owner is actually much more than what the home is worth. In this case, the owner is asking the bank to let them try to sell the house for less money than they owe the bank (thus the term “short” sale….because you are going to fall short of paying your whole mortgage), and in doing so the owner is supposed to walk away without having to undergo the pain and damage of a foreclosure.

Let’s take an example. A couple bought a home in San Diego for $450,000 two years ago. Mortgaged to the hilt, they financed 100% of the sale, and they currently have a first trust deed and of $360,000, and a second trust deed of $90,000. The decline in prices has resulted in the home being worth only $350,000 now, less than 80% of the price they paid. Their rates are rising, and they can no longer pay the mortgage. They are in trouble financially, and without equity in the home, are unable to refinance and move on with their lives.

So they go to the bank and ask for a short sale. The bank says “okay, but keep paying your mortgage.” Then the owner places the home on the market for $350,000, and that home is marketed “pending lender approval.” Any offers that come in on the property need to be submitted to the bank. Remember, the $350,000 IS NOT THE PRICE THE BANK HAS AGREED TO SELL AT!!! Rather, it is the price the Realtor has told the bank the home MIGHT sell at, and the only thing the bank has agreed to is to review any offers and possibly accept them.

This is why you should fear the short sale, both if you are an owner in dire straits, or a buyer who is really looking to purchase. Both parties are at the mercy of the bank, and the bank’s motivation is not to sell at $350,000. Rather it is to keep the owner paying their mortgage, and thus keep the loan alive. If the bank can keep the owner paying, they forestall foreclosure and the loss on the loan for perhaps enough time for the market to gather itself up and make the home worth more. It’s not going to be worth enough to pay the mortgage, but if may be long enough to make the bank’s loss less.

Now, here’s the really bad news. Let’s say you go along with the bank, list your home as a short sale, and then some six to eight months later sell the home. Are you off free and clear? The answer is a double whammy NO. First, during these six to eight months you have been paying the mortgage, digging deeper into your reserves to pay the bank. You’ll never get a return on your money. And next, what about your credit? Isn’t a short sale supposed to be way better financially than going through a foreclosure? Isn’t it?

Well, according to Fair Isaac (the folks who bring you the FICO score), a short sale can cause the immediate loss of 70 to 200 points on your credit score, and this stigma will last on your credit from 2 to 3 years. That essentially means that you are persona non grata in the financial world. What happens if you get foreclosed on? Well, your FICO score will go down 70 to 150 points, and you’ll have the stigma of this bad credit for 3 to 5 years. Neither result, either from a short sale or a foreclosure, will be pretty to look at financially, but the difference between the two really needs to be looked at without emotion. When you do that, it is clear to me that many more people should be walking away from their homes in a foreclosure, and not burying themselves in the short sale process.

Here’s what FICO has to say:

“The common alternatives to foreclosure, such as short sales, and deeds-in-lieu of foreclosure are all “not paid as agreed” accounts, and considered the same by your FICO® score. This is not to say that these may not be better options for you from a financial perspective, just that they will be considered no better or worse for your FICO score. If you are considering bankruptcy as an alternative to foreclosure, that may have a greater impact to your FICO score. While a foreclosure is a single account that you default on, declaring bankruptcy has the opportunity to affect multiple accounts and therefore has potential to have a greater negative impact on your FICO score.”

Fear a short sale. You may want to talk to your financial advisor first about any decision you are going to make that will adversely affect your credit, and certainly if you are in jeopardy of losing your home. But don’t take a cursory look. Look long and hard at all your options. You can’t change the fact that losing your home is going to be painful. You can’t change the fact that losing your home will be stressful and perhaps an embarrassment. You can, however, decide which option really affects you now and in the future, weigh those options, and at least keep the financial damage at a minimum.