Short sales, foreclosures and reo properties

Short Sales, Foreclosures and REO Properties - What You Have to Know to Find and Buy (short version)

1. Find the Right Location Even though you are looking for great deal, real estate, as always, is all about location. Don't be seduced by a great price into living in an area where you and your family are not happy. One of the first keys to finding a good bank owned home is to select the area you want to live. Right now, there are bank owned homes in every community.

Maybe not as many in some areas as others, but there are bank owned homes in every city. The next step is to be open to broadening the area you have selected.

By expanding the circumference of your target area, you exponentially increase the amount of bank owned homes to select from. If being in a certain school district is your number one concern, check the boundaries of the district and allow a search of homes in the entire area. Another suggestion is to look for homes that are smaller than what you really want. Take a look at homes that can possibly be added on to and remodeled.

Many if not most bank owned homes are in some sort of disrepair. By looking for a home that can be bought for less money than your budget, you can find more selection of homes to choose from.

2. Here is why REO homes and Short Sales take so long to close escrow.

The main reason that reo school homes and Short Sales take so long is the amount of loans that are being processed by the banks and loan servicing companies. Each asset manager is handling a workload in excess of 200 files at all times. Each file is a complex financial puzzle and no two files are the same.

3. What can you do to speed up the REO home escrow and closing process?

Look for pre-approved bank short sales. You are looking for a bank sale that was approved but has fallen through for some reason. The bank has a price it is ready to accept and you just need to make the offer. Check the Internet listings and the MLS -but the best option is a knowledgeable real estate short sales specialist who has lots of contacts to find short sales not listed on the MLS.

If you need financing to buy the house, you should be pre-approved for loan, not "pre-qualified". The bigger your down payment and payment in cash will help facilitate getting the home. Having all financing set will speed up the process.

Once you do get an approval on a property, be prepared to do your inspection quickly and respond to seller disclosures. Typically you only get 10 days to complete and remove any contingencies. Have an appraiser and inspector selected and ready to go on short notice.

For prime "move in ready properties in good locations, there are often multiple offers. You need to be prepared to pay a price over the asking price. The more cash you can bring to the table, the better your chance of getting the house. Even if there are no other offers on the home, be prepared for the bank to reject your first offer and make a counter offer. A larger "short sale specialist" agency with lot of agents and lots of contacts with banks may be able to negotiate directly and speed up the process.