Foreclosures

Distressed Property Sales; Sacramento Foreclosures

A foreclosure or REO property is the result of a bank who foreclosed on the previous owner.  At the foreclosure sale on the courthouse steps they were the buyer of the home because nobody else ended up bidding the price they set for the home.   The bank then goes through the process of vacating the previous owners or tenants using eviction if necessary.  They will then usually make minimal repairs and then list it for sale to sell as a REO (Real Estate Owned or sometimes called Corporate Owned) property.  Typically REO properties and Sacramento foreclosures are priced for less than even short sale or active listings.  This is due to their condition and also because the bank will want to move the property out of their inventory quickly.  Banks choose REO agents to sell these REO’s who can close a sale quickly and they keep track of their close rates.

A Brief Timeline of the Foreclosure Process:

A property becomes foreclosed through specific actions a bank takes after the owner fails to make payments. These homes are then evaluated by the bank and placed for sale on the open market. The perception is that a bank-owned home (also called Real Estate Owned (REO) or Corporate Owned) is less expensive than other homes, however this is usually due to the home’s degraded condition.

The earliest a bank can foreclose on a home after a borrower becomes delinquent is about 8 months. First, after 4 missed payments, the borrower is in default. The bank can place a Notice of Default (NOD) on the home and files this legal document with the county. It is a public instrument. Many sites sell these lists, however they can easily be obtained from a broker or title officer. After 90 days the bank can file a Notice of Trustee’s Sale (NOT) which announces a 21 day deadline before the home will be auctioned off.

After the auction, if no one buys the home, or if the bank buys back their own note, the home is assigned to the REO division of the bank. The REO division will spend 1-3 months securing the property, evicting or relocating the occupants, evaluating the price, and then placing it on the market. Banks always place homes on the local MLS and most require a minimum of several days exposure before accepting an offer, but not all do. Banks generally price their homes aggressively, and most REO properties in the area sell for very close to their asking price.

Banks are not emotional about selling, and they are never specifically motivated to sell an individual property. If the property doesn’t sell, the bank simply waits and reduces the price every 3-4 weeks.

If you have any questions about buying a bank owned REO home, feel free to contact us.

We are experienced Sacramento Real Estate Attorneys and Sacramento Realtors. We are a unique and powerful combination and can help you buy Sacramento Real Estate homes or sell Sacramento Real Estate homes with proven results, legal advice and the strategy needed to give you the results you want. Contact us today by clicking HERE or by calling 916-378-5760. We look forward to helping you with all of your Sacramento real estate needs.