A Guide to Buying REO Foreclosures in Los Angeles
Increasing numbers of foreclosures in Los Angeles have resulted in a decline of prices in homes. With the government trying to infuse some stability in the market, a large number of people are speculating that this is a good time to buy foreclosure homes.
If a house fails to sell at the public auction, it passes on to the lender who holds the primary mortgage on the property. This is when the house becomes a Real estate Owned (REO) property.
An increasing number of people want to save money by buying an REO home as many of them are sold for well under their market prices. When lenders offer to sell homes for less than their market values, it often results in multiple offers being made. This could mean that there would be more competition in buying the REO home in question.
It is not uncommon for up to 15 offers being made for one REO home. At times like these, banks are known to discard most of them and ask a limited few to resubmit a ‘highest and final’ offer for the home. At other times, they could simply accept the highest offer during the first round of offers.
There are a few things that you, as a homebuyer, could do to increase your chances in getting the REO property you want to.
Firstly, you should ideally engage the services of a buyer’s agent. The agent can help you in finding out the purchase price of the bank through the property’s deed. This price should be compared with the asking price of the bank. In cases where the home is priced below the market value, banks could end up accepting offers which are in between the asking price and the amount that the loan on the home secured.
There are times when the asking price is of little importance. It is the market value of the home that should ideally be taken into consideration, as, if a home is selling for under its market value; there is a good chance that people will bid above the asking price. You can go through the comparable sales within the neighborhood for the last 3 to 4 months to see how much the REO home is worth. While doing this, try picking homes that match the REO home in question in terms of area, condition, etc.
You should also find out how many offers have been made for the REO home. If no other offers have been made, an offer below the asking price can also be accepted. However, if there are 15 offers for the home in question, the situation changes considerably.
There are other things you could do, and while buying an REO home, do take the required time to pick the home you want to own.
