The current real estate market in Hemet California and throughout Southwest Riverside County and the remainder of the Inland Empire is full or Bank Owned properties, otherwise known as REO for "Real Estate Owned"..
When someone wants to buy one of these properties it is not much different than buying a home that is owner occupied. Yet, there are some very significant differences. Lets take a look at some of them...
Inspections, Repairs and the Appraisal: Similar to a traditional owner occupied purchase of Hemet real estate, you will have the opportunity to perform your due diligence. You have the right to a home inspector to look the place over with their fine tooth comb. If they identify issues that may require a specialist, such as a faulty heater, you have the right to have your HVAC contractor look at the problems as well.
Unfortunately, the lender will typically not make any of the repairs that are not required by law. It is my understanding that the seller must have the hot water heater strapped in to current code as well as having operating smoke detectors in the residence. In most cases, the seller will also be liable for and section 1 termite work - although I have seen some lenders balk at this and kill a deal.
Just like your traditional owner occupied seller who refuses to make the necessary repairs, the buyer has every right to back out of a contract if major problems are uncovered. Every lender has their own addendum's to the sales contract, so make sure you read it very carefully just what will and won't be covered.
Of course, you still must have an appraisal conducted if you are borrowing the money from another bank - I do not believe anyone will lend you the money for the purchase of a home without an appraisal. Of course if you are an investor who has their own money, then you may fore-go the appraisal process at your own risk. As in any standard contract, the offer is subject to the appraisal matching or exceeding the purchase offer price.
Tax Liens, HOA Liens and Liens against the Prior Homeowner: I am asked frequently if there are any liens against a property and when the bank has taken it back in foreclosure, they have assumed all responsibility for any lien that is not wiped out.
The good news is when you buy a home in foreclosure; you will be buying Title Insurance that will guarantee that there are no liens on the property that have not been cleared. Otherwise, the Title Company may find itself on the hook!
The Escrow Period: Another frequent question has to do with the time frame of closing escrow. Typically a bank will give you a decision as either a counter offer or an acceptance within a day or two. Occasionally, some banks may take a bit longer - I recently had one take 2 weeks for an acceptance. This was the exception to the rule however, as the recent wildfires were ablaze and lenders were busy figuring out what properties of theirs were being effected by the fires.
Once both parties have agreed to an accepted offer, escrow is opened. Typically, most lenders will have designated a escrow officer and Title officer to process the transaction. As strange as it may seem, these are often many miles away from the specific property - but convenient to the lender. Often a discounted rate may have been negotiated for the service, since the Title and Escrow will be handling all of the lenders transactions. Bottom line, don't expect to use your favorite Escrow or Title officer; it really is not a matter of negotiation.
The escrow is fairly typical with a closing date agreed to by both parties. Obviously, the bank can close anytime, so it is up to the buyer to determine just how long an escrow period they will require. CAUTION: In the addendum's the bank will attach to the listing agreement, there may be a daily per diem charge if escrow is not closed by a specific date.
These are perhaps the most common differences to consider when a home buyer wants to make an offer on a Hemet REO property or any other property. Hope you have found this information helpful.
Now Have a Blessed Day,
John Occhi, Hemet CA REALTOR®
Mission Grove Realty
Author of "What You Need to Know...About Foreclosure and How You Can Stop It!" - If you are a Hemet or San Jacinto Homeowner please call (951-443-6259) for your free copy.
This blog and the contents written here is the intellectual property of John Occhi, Hemet California REALTOR®. The views and opinions expressed are just that - views and opinions of John Occhi and those who comment. Please note that I am not an attorney or a tax professional and any time I discuss either topic, I suggest you consult with the proper professional for relevant assistance.
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I am proud to be a full time REALTOR® with Mission Grove Realty who is proud to be a contributing member of the ActiveRain community.
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