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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.

Investing in foreclosure bargains is not easy to do; some people make it sound like you simply walk over to the courthouse and make the deal. However, the trick is to purchase the home before someone else makes it his or her investment. Becoming a real estate tycoon is not about what you can afford, or what you are willing to spend, it is about the valuable information that you learn about a property. Research is a key factor to being a successful investing in the real estate industry. Buying homes at San Diego foreclosure auction can make you very large profits.

Some San Diego Real Estate investors earn more than $75K on one transaction or you can buy the San Diego foreclosure or REO property for you and your family to live in and save the money. Conditions have to be right and the situation ideal of course to profit this much on a single property, it is possible though to make a substantial living on San Diego Real Estate investing. There is no better time than now, we are in a buyers market, with the increase in San Diego foreclosures in the US, there is an overwhelming number of San Diego foreclosure and REO "deals" available, you just need to know how to find them.

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The art of a foreclosure deal, can be a thing of beauty if you know how to negotiate a San Diego foreclosure or REO deal. It may not be internationally recognized in the same stream of consciousness as a masterpiece by Renoir, Goya, Monet or Picasso, but a well constructed San Diego foreclosure investment deal can be a masterpiece to those who appreciate the effort that went into it. You need to use a foreclosure Realtor to buy foreclosures and REO's if you want to learn the pros and cons of buying San Diego foreclosure and REO houses and condos.

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ousing market cooling and the resulting fallout from the subprime mortgage meltdown, there are many San Diego bargain hunters are looking at foreclosures as an option for purchasing a San Diego home.   Buying a home in pre-foreclosure in San Diego is full of roadblocks, but in the end can be rewarding if you approach it correctly.

Understanding Pre-Foreclosure Home Owners

If you are going to purchase a San Diego pre-foreclosure, it may help you in your negotiations if you understand what they are going through.  There isn't anything more stressful than facing the prospect of foreclosure on your San Diego area home.   The home owner is under tremendous amount of anxiety and panic over the situation that they are currently in.   San Diego home owners in foreclosure are not going to be objective and in many cases they are looking for someone to blame.

Read Also:  About Buyer Foreclosures and REO's

To be successful in negotiating with San Diego home owners in foreclosure you will need to be empathetic and build a connection with them.   It helps to remember that many times the foreclosure is a result of problems that are out of the San Diego home owner's control.  It could be a divorce, loss of job, an unexpected illness or poor financial decisions.   These San Diego home owners are facing uncertainty with fear and denial driving their decisions.

Many times it is hard to work through the process with these San Diego owners in foreclosure.   They often do not have the final decision, having to have the bank's approval.   The closer you are to the foreclosure date, the more the bank will be willing to listen to reasonable offers.  Don't be afraid to submit an offer after rejection a few weeks later.  The bank might just be willing to accept the offer.  Remember it is all about the timing!