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Sonoma County, California Homes For Sale. Find a Wholesale Bank-Owned REO in Sonoma County, California, CA:Featured Topic: REOWhen a bank takes back a home in foreclosure, it becomes an REO and is assigned to a local agent. In a foreclosure situation, the amount owed to the bank is almost always more than what the property is worth, very few foreclosure auctions result in a successful sale and the property instead reverts to the bank, thus becoming an REO, or Real Estate Owned property. In a REO situation, a bank will typically set the opening bid at a foreclosure auction for at least the outstanding loan amount and, if there are no bidders that are interested, then the bank will legally repossess the property, and as soon as the bank repossess the property, it is listed on their books as REO (Real Estate Owned) and is categorized as an asset (non-performing). The current REO inventory holds many opportunities to create a monthly cash flow on Southern California rental homes. REO listing agents are judged by the banks on their ability to find worthy buyers that can close escrow without hassles. A failed escrow is a negative mark on their record. An educated, well researched offer can be profitable in almost any market but especially so in a down market with a glut of REO inventory. The use of weasel clauses in an REO purchase shows a lack of confidence on the buyers part and should be avoided when making REO offers. A property that is still in foreclosure does not yet belong to the bank and the homeowner must be engaged. An REO purchase does not involve the homeowner. Most REOs are secured by an agent lock box and will require an agent to access the interior. It is important to be mindful of potential holding costs when calculating monthly cash flow on an REO purchases. When buying a Fannie Mae owned REO, you should know the condition of the property, the cost of any needed repairs, and the steps in the loan qualification and closing process before you enter into a purchase and sales agreement. You do not have to use Fannie Mae's selected title, settlement, or escrow companies on an REO purchase. You may designate the title, settlement, or escrow company of your choice, subject to the terms of the contract. Banks negotiate bulk-rate discounts with title and escrow companies. If you elect to use the bank's title escrow company, check the fees those companies will charge you. Generally, fees not paid by the bank but paid by the buyer will be higher because title and escrow often make up those discounts by charging buyers more. Many are in fine neighborhoods and offer outstanding values. And while some REO homes do qualify as handyman specials, many are in very good condition. Usually the Bank won’t accept an offer directly from you. Banks accept offers only from a real estate agent or broker. While REO investors are underbidding on many foreclosure properties, Christopher Thornberg, a principal at Beacon Economics in Los Angeles, said that interest is coming from “vulture funds” with millions of dollars to spend on distress sales. Thornberg said Wall Street vulture funds are amassing war chests in preparation for a new cycle of opportunities in loans or bonds of struggling financial companies or homebuilders. Being a slumlord can be costly in a market where local municipalities are looking to impose maximum fines on landlords to generate income. This should be considered when making an REO purchase for hold and rent. REO: this is an acronym for Real Estate Owned, and this used to be called the bank department that managed the properties the bank had reacquired through a foreclosure process If the house does not sell in the auction, it reverts back to the bank. The lender now has the right to sell the property as an REO (real estate owned), the third and final phase of a foreclosure. There are some downsides to REOs. While REOs are sometimes touted as real bargains, the lenders know very well what they're worth and will drive a hard bargain to ensure they are getting as much money as possible from the sale. |
