Interested in buying a low priced Bank owned (REO) or short sale home?

By
Real Estate Broker/Owner with (831) 626-4000 CA #01772851 HI #RB-21268

This is the second in a series of blogs that I am writing to FIRST TIME HOMEBUYERS in Crescent City, Del Norte County, California.

I recently had the pleasure of helping a couple find their first home and, in this market where houses go under contract within a few days, it was very instructive. So let me present the scenario because, chances are, this is what you will be faced with as well.

SCENARIO:

1. Couple is pre-approved for only enough loan to purchase a lower end bank owned (REO) or Short Sale home. (Pre-approval is a MUST before looking at homes - ask me what that entails.)

2. The two places to SEARCH for homes in this category is the local Multiple Listing Service click here to check out my IDX/MLS link or www.HOMEPATH.COM (input the city you are in).

3. REALTOR(R) sets up showing of homes that appeal to the buyer from photos on the listings. In this price category and if it is a REO, the homes will be vacant and a lockbox on the door which the REALTOR(R) can open. If it is a SHORT SALE, in many cases the owner still lives there or has tenants. In this case, the REALTOR(R) has to make arrangements to get in.

4. OFF YOU GO TO VIEW THE HOME WITH YOUR REALTOR(R). At no time are you, the buyer allowed to go into a home by yourself. If someone urges you to do so, you will be trespassing. If the REALTOR(R) gives you the passcode to get in THE REALTOR(R) IS ALSO BREAKING THE CODE OF ETHICS, AND PROBABLY THE LAW.

5. If the REALTOR(R) has not been in the house before, she will be inspecting the home to look for potential problems - and point these out to you, the potential buyer. Here are some of the things that could prevent you from purchasing the home (or at least, the appraiser will stop your lender from giving you the loan):

A. There is unfinished construction in the home. This is something I have seen a lot here in Crescent City, Del Norte County, California. In many cases, this kills the deal unless the construction is finished before your lender agrees to fund your loan. You may be out several hundred dollars worth of appraisal fees.  

B. There are added-on additions that have most probably been done since the original house was built. Had the owner gotten permits? Is this legal construction? You see, if you buy a REO home, the bank/owner will not give you any warranties or make property disclosures. You, the buyer, won't find out what the deal is until an appraisal is done WHICH YOU, THE BUYER PAYS FOR. That means, if your lender won't fund the loan because of this construction, you are out several hundred dollars in appraisal fees.

C. Dry rot: This is a big deal here in Crescent City as well. It's harder to spot if the owner has covered up the spots with paint, or it's in the walls and you can't see evidence of it under normal circumstances. But there are tell tale signs, and your REALTOR(R) should be able to spot them. Dry rot also can mean mold, mildew and other problems. Again, without this advice, you might be out several hundred dollars worth of appraisal fees.

D. Other problems: Here is a blog I wrote about  "10 things I don't want to see during a showing." MUST READ!!!

OTHER ADVICE THAT THE REALTOR(R) CAN SUPPLY:

Because we watch the market so closely, we see certain properties COME BACK ON THE MARKET. If this happens, you want to know WHY. Was it because:

1. The buyer could not get the loan - that had nothing to do with the home he is buying? In which case, it does not "stigmatize" the home.

2. The buyer could not get the loan - because the appraisal came back :

A. TOO LOW: The house is priced TOO HIGH.

B. REPAIRS that needed to be done or corrected and the lender/seller is not willing to do them.

THIS HOUSE IS TROUBLE.

But if you, the buyer, have your heart set on this home, there are certain things that I, your REALTOR(R) can request on your behalf. Sometimes it works, sometimes it doesn't. So far, I've had a good track record of:

1. Getting the lender to lower the price.

2. Getting the lender/seller to make repairs.

3. BUT THERE ARE NO GUARANTEES. THE THE REO OWNER OR THE SHORT SALE LENDER/SELLER CANNOT BE FORCED TO DO ANYTHING. BUT I HAVE A GOOD TRACK RECORD.

SO YOU THOUGHT BUYING A LOW PRICED HOME WAS EASY? MAYBE. LET ME HELP YOU THROUGH THE PROCESS.

Posted by

Hella Mitschke Rothwell, Broker/Owner/REALTOR 

 

Let me be your independent real estate broker for oceanfront and oceanview property in California and Hawaii.  If you are a seller/owner, I will travel to your property to help get it ready for sale, then list and market it. If you are a buyer and we have a Buyers Representation Agreement in place, I will preview property on your behalf anywhere in California and Hawaii.  Please call me to discuss how I can help you.

Search Hawaii Listings on www.HellaHawaii.com

Member: Honolulu Board of REALTORS; National Association of REALTORS; Hawaii Association of REALTORS; Del Norte Association of REALTORS; California Association of REALTORS; MLSListings, Inc., the premier MLS listing service in Northern California.

 

________________________________________________________________

Hella Mitschke Rothwell (R)

Real Estate Broker/Owner/Realtor®
Licensed in California #01772851 & Hawaii #RB-21268

Tel. 808-226-1095 or 831-626-4000 

Fax 1-877-822-9332

www.HellaHawaii.com

www.HellaRothwell.com

www.RothwellRealty.com

HAWAII OFFICE: 1128 Ala Napunani Street, #1809, Honolulu, HI 96818

 CALIFORNIA OFFICE: Su Vecino Court, Lincoln & Dolores between 5th & 6th, Carmel-by-the-Sea, CA 93921

MAILING: P.O. Box 4554, Carmel-by-the-Sea, CA 93921

 
Email: HellaRothwell@gmail.com


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Disclaimer: Hella Rothwell does not guarantee nor is in any way responsible for the accuracy of the information provided herein, and provides said information without warranties of any kind, either expressed or implied.

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Bob Baesmann 03/04/2013 07:08 AM
Topic:
Real Estate Best Practices
Location:
California Del Norte County Crescent City
Groups:
Short Sales Specialists
Bananatude
ActiveRain Challenges
Tags:
interested in buying a low priced bank owned reo or short sale home

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Rainmaker
1,434,857
Yolanda Cordova-Gilbert
Richmond, TX

Hella,

             Great advice and it is so obvious you know your area and its pitfalls! This will be a great series! I hope you are having a great Monday!

Mar 04, 2013 06:41 AM #1
Rainmaker
686,859
Hella Mitschke Rothwell
(831) 626-4000 - Honolulu, HI
Hawaii & California Real Estate Broker

Yolanda: Thank you. I really feel this needs to be told to first time buyers. There are just too many pitfalls which will cost the buyer money, time, and lost opportunities.

Mar 04, 2013 06:46 AM #2
Rainmaker
1,142,744
Laura Allen, Lake Tahoe - Truckee Real Estate for Sale TahoeLauraRealEstate.com
Coldwell Banker, Tahoe City, CA (530) 414-1260 - Tahoe City, CA
Tahoe Real Estate Agent Helping Buyers and Sellers

Hella - Great home buying advice for any potential buyer to have.  I thought knowing about "dry rot" in Cresent City was a really helpful tip for buyers in your area.  Well done!

Mar 04, 2013 09:44 AM #3
Rainmaker
686,859
Hella Mitschke Rothwell
(831) 626-4000 - Honolulu, HI
Hawaii & California Real Estate Broker

Laura: We have quite a few older homes with that problem. And it's not necessarily apparent.

Mar 04, 2013 10:06 AM #4
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Rainmaker
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Hella Mitschke Rothwell

Hawaii & California Real Estate Broker
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