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REO Simplified What does REO mean anyway?

How is this different from the typical buying process of a San Diego home or condo? When considering a San Diego REO property - as with all San Diego properties - it is important to be well informed so you're well aware of the process from the first handshake through the closing.

Q. What does REO mean?

A. REO is an acronym for Real Estate Owned. REO is a financial industry term referring to properties that an institution has foreclosed upon and now owns.

Q. If I submit my offer directly to you rather than through the listing agent, will the Lender accept a lower price?

A. We only accept offers that have been submitted through the listing agent. We price our properties in accordance with the local market and expect to sell at market value. As with any property listing, our asking price takes into account its condition as compared with the local market.

Q. After submitting my offer, how long should it take to receive a response?

A. We will provide either an offer acceptance or counter offer to our listing agent within 48 hours of receiving the offer from our listing agent. The listing agent will inform your buyer's agent of our response if you are working with a separate agent, or you directly. If an offer is submitted during the weekend, it will be reviewed on the next business day.

Q. What if the property requires repairs, either minor or substantial?

A. Make sure that you speak with the listing agent to ensure that you understand the terms of our listing clearly. In most cases, the property will be offered in an "as-is" condition, with the list price reflecting its condition. When purchasing a property "as-is," ensure you've done your homework to clearly understand the structural and mechanical condition of the building, HVAC, internal plumbing, the well and septic system. Depending upon the condition of these components of the home, the types of financing available may be impacted. However, there are special loan products available that will lend on the "after improved" value of the home thereby making it possible to purchase even the most neglected property and to make it the home of your dreams.

Additional Reading of Interest:

• The Lure of the San Diego Foreclosure Auction!

• Get Rich In Real Estate: San Diego Foreclosures and REO's

• Avoid This Mistake When Flipping San Diego Foreclosure and Investment Properties

• What Is An Acceleration Clause?: San Diego Foreclosures and REO's

San Diego Lease Options and Subject To's (aka "Getting the Deed") are two very popular ways to purchase San Diego real estate with little or no money down. Acquiring San Diego investment real estate can be handled with many different approaches, but these two techniques can be implemented with little or no money down in most incidences.

A lease option is a technique which involves gaining 'control' of a San Diego property, but not owning it. It is the right to possess a property now and purchase that property at some future date with terms you define when you buy it.

A "Subject To" is getting the deed to a property without getting a mortgage for the home. Instead, the seller signs over the deed to his home 'subject to' the existing mortgage. The buyer in this case makes the mortgage payments on the old loan, but does not need to get a new mortgage (or ask for approval through an assumption of existing mortgages) to acquire this home.

Both of these techniques usually require little or no money down. In both of these techniques it is possible for the buyer to get money from the seller or the purchaser (or both!) in the beginning of the transaction. These techniques, when used properly, will provide for huge profits. They are both awesome, and when used hand-in-hand by investors are almost an unbeatable pair!

Why Knowing Both Techniques Means More Great Deals For You!

I can't tell you how many times I have heard, "If I don't get the deed, I don't do the deal". With over 20 year's of experience (since 1985) doing both types of deals, I have to disagree with that statement. The more tools and techniques and ways you have to purchase property or to structure a deal, the more likely you will be able to work with a motivated seller to come to a potential solution. If you only buy "Subject To", you'll walk away from a LOT of great deals in your real estate career, but you must know when each technique is appropriate to use. Finding a motivated seller is the first step to any good real estate deal.

There are many types of motivated sellers, but we tend to think of motivated sellers as the ones that are financially distressed. I like to look at motivation from a much wider range. Let me explain. I like to divide motivated sellers into two groups: Situation Sellers that have Bad Debt Solution Get the Deed NO Lease Option! VS. Situation Sellers that have Good Debt Solution Lease Option or Get the Deed!

Sellers that have "Bad Debt" are those in financial trouble. They might be behind on a mortgage (in foreclosure), have lost their job, acquired an illness, going through a divorce, etc. In these situations, you need to get the deed either with a Subject To or an outright purchase. Your main concern is that this type of seller will continue to have financial problems that could affect the title to "your" property if the deed is still in their name. For example, if this seller gets judgments from creditors, they can attach to any real estate the seller owns - they will have to be paid off before you can exercise your option to buy. That's why you want to get this type of seller off of the title. Sellers that have "Good Debt" are those NOT "in trouble" in the traditional sense, but they do have a reason motivating them to sell. Their problem is not one of financial desperation.

California law prevents a California real estate agent from representing buyer/investors in the case of purchasing a foreclosed property under certain circumstances. While we always recommend that to completely understand your rights as a foreclosure buyer, you should contact a local real estate lawyer, the following article explains the basics. The first thing you must realize is that in California, a real estate agent CANNOT represent a buyer who is an investor to purchase a foreclosure property if all of the following four statements are true:

• The home qualifies as the seller's personal residence.
• The property is a single family home or 2 to 4 units.
• A Notice of Default has been filed in the public records against the property.
• The investor buyer will not occupy the property.

Now, if any of those four statements are false, a California Realtor is allowed to represent the buyer. However, if a real estate agent is representing an investor, the agent is required to post a bond, and no such bond is available in the state of California. Therefore, pre-foreclosure investors in California must represent themselves.  Think that is a hairy situation?  Foreclosure investors are required to comply with the Home Equity Sales Act and sellers who are in foreclosure have the right to rescind (cancel) a transaction within five days. Investors must give the seller notice of that right, and provide them with a copy of the form that will let sellers cancel.   Failure to comply with the Home Equity Sales Act carries severe penalties, including a provision that gives the seller the right to cancel the sale up to two years after the sale to the investor has closed and get the property back.

Read also: California Foreclosure Laws

se you are well known does not mean you are immune from the foreclosure crisis.  Celebrities like Jose Canseco, Courtney Love, Ed McMahon, Marion Jones and Michael Jackson all have found themselves in trouble with their mortgages.  

Read Also:  Rich & Famous not immune

Celebrities are not immune from making bad financial decisions and the realities of foreclosure.  Interested in seeing what celebrities are in danger of losing their luxury homes there are several articles over at Luxist that share the celebrities in trouble.

Read Also:  LALand's Celebrity Foreclosure List

It is hard to understand how someone who is rich and famous could be running out of money and facing foreclosure.   But just because they are famous does not mean that they make sound financial decisions.   The housing market has seen better days, and when Real Estate values were rising, and there was no end in sight to the increases.   To maintain that lifestyle costs money and many of these celebrities are living paycheck to paycheck.

Read Also:  Celebrity Foreclosures

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When it comes to real estate investment options, the decision to invest in San Diego foreclosure properties is always a sound choice, even under the best market conditions; however, currently San Diego foreclosure properties may be an even better choice for profitable real estate investment than ever before. The rising foreclosure rates are making San Diego foreclosures available to new investors every day.

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