Sonoma County Home Loans

REOs

Real Estate Owned by a bank after the bank forecloses on a property is called  an "REO".  These properties are relatively easy to purchase with the help of an experienced real estate agent.  Keep in mind, the listing agent will act as the bank's agent to find a buyer for the property.  To do this, they may list the price at a much lower price than the home will eventually sell for.  Be prepared to offer full price or even over asking price on many of these properties.  Your real estate agent can get background information on the sale to know the proper offer amount.

Often these properties are in disrepair, damaged and show deferred maintenance.  They will most likely need cosmetic care upon purchase; like paint, carpet, and landscape corrections.  These costs should be kept in mind when making your purchase offer.  REO sales close as quickly as any other normal home sale.  Title insurance insures that you will have clear title with all liens and taxes paid up when you buy an REO.

Short Sales

When a home owner can no longer pay the mortgage and owes more than the home can sell for, the owner can ask their mortgage holder to accept less than the debt amount in a home sale.  The bank will take a loss, if agreed, and this is called a "short sale".  A seller will quickly accept an offer on a short sale, but it is up to the seller's loan bank and approve the sale.  The seller will receive no proceeds from the transaction.

Short sales can take a very long time to close (up to 6 months), since the bank has to go through an approval process analyzing the seller's financial situation along with comparing the offer price to market value and amount owed.  Often, the bank will settle for less than owed because the loss would not be as bad for the bank as if the home continues on into foreclosure.

Buying an REO is preferable to buying a short sale in most cases.  But in places like Sonoma County where bidding wars occur on the REO listings, short sales may be the opportunity for patient shoppers.  Keep aware that as months pass, values may change from original purchase offer.