Many people want to take advantage of the current market conditions in the Sunland – Tujunga area located in the foothills to the east of the San Fernando Valley and the north of Glendale. There is currently a high inventory of bank owned REO property for sale in the region at very affordable prices.
Finding a good home is typically not the problem – as we have many to choose from. Today there is even a wide selection from as low as $225,000…if you don’t mind taking care of some repairs. There are many near move in homes available for well under $300,000 – maybe just in need of some fresh paint and flooring.
FINANCING
The buying process should not start with looking at homes, but rather with qualifying for financing. Perhaps the biggest determent in the market today is not the inventory in Sunland, but the financing options; as more and 
more lenders tighten their belts and really narrow down the availability of consumer friendly loan products.
One of the big misconceptions about financing a Sunland – Tujunga REO home for sale is that there is money available to borrow for repairs. While there are approved FHA programs (and others) this does not mean that there are lenders willing to take on that kind of risk. So, for the most part, rehab money is not available to borrow via traditional resources.
The other challenge today is there is not a 100% loan. Stated Income and No Document loans are all but a distant memory. Today the borrower must have a decent credit score, a low debt-to-income ratio as well as verifiable employment, funds on hand and income.
The FHA has a First time Home buyer program that many homebuyers in the Sunland – Tujunga area take advantage of. The FHA will allow the seller to contribute up to 3% towards the buyers closing costs. Today most lenders are willing to participate in this program in order to sell a Sunland REO home for sale.
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You should be cautioned though, if the home is listed for a really good price and it is new on the market or has just taken a dramatic price reduction and is generating a lot of activity then you may want to stack the fees you are asking for.
As an example, there was a nice 2 bedroom 2 bath REO home, in the Inland Empire, that just came on the market, last Friday for $75,000. It was not very rough – but it did need a bit of cosmetic work and some minor remodeling. I saw the property on Sunday with my buyer from Sunland. We wrote our offer and submitted it to the listing agent for $85,000, asking for the 3% seller contribution towards the closing costs. About 10:00 a.m. Monday morning spoke with the listing agent and discovered that I was right in the middle of 8 offers, (with more anticipated coming in) and advised if my client wanted the property, they should submit their “highest and best” offer.
The flip side is homes that have been on the market for over 30 days are obviously not a hot commodity and there is room for negotiation. With another buyer, we found another Inland Empire home in the MLS that had been on the market for 43 days and had not yet reduced its list price of $92,000. Again, the home was in fair condition and only requiring the cosmetics of fresh paint and flooring. Yes, there were projects discussed to improve the property – but they were not necessary to make it move-in ready. In this case we offered $85,000 and requested the seller contribute the 3% ($2550) towards the buyers closing costs. Done Deal! Another Sunland REO buyer scores a victory by looking outside of the immediate market area and we get to open escrow.
Back on Topic – The Loan Process
Regardless of whether you are buying an REO property of a For Sale By Owner (FSBO) or any other Sunland – Tujunga real estate for sale, it all begins with money. So unless you are a cash buyer you will need to obtain financing.
The First Step: Apply
The application process is rather simple. As a REO REALTOR® with Century 21 Crest in their REO division, CrestREO, I prefer to have you speak with one of the lenders that I do regular business with – preferably John
Severino at Capital Lending Corp. It’s not that I have a financial incentive that you work with anyone; it’s that I have an established working relationship and an open avenue of communication that helps get the job done. Teamwork is critical to a smooth transaction and closing escrow on time.
Typically, when we meet, I will put you on the phone with the John Severino, the Capital Lending Loan Officer or another that I believe will best be able to work with you in your particular situation. The lender will answer general questions about available loan programs based on the verbal answers you provide to the questions the Loan Officer will ask.
Second Step: Pre-Qualification
After you application has been made and the Loan Officer has you gather additional documentation and your credit has been reviewed a decision can be made based on viewing your total picture.
Based on the complexity of qualifying and underwriting criteria the lender may suggest several different loan programs that may work best for you. The Loan Officer is a professional and his expertise comes from knowing the inventory of loan products and matching you to the one that works best for you…not the one the lender can earn the highest commission for.
Once you jointly agree with the Loan Officer, a Pre-Qualification Letter will be issued letting you know how much home you qualify to buy and what your own financial contributions will be. Additional information may include interest rate and monthly payments.
Step Three: Processing
This is where a file is built that assembles all of the documents necessary and verifies all of the information provided such as you income, your debt, your assets as well as all of the information on the property you are buying.
During this phase, the REO property will typically be appraised and any inspections completed so the lender will know the condition of the property. Remember, the lender is not only taking a calculated risk on you the Sunland REO home buyer, they are also taking a risk on the Sunland REO home (or any other area you choose to buy – such as the Inland Empire)– and who really knows what condition that is in?
Step Four: Doc’s
Document Preparation, or Doc’s as it is often referred to, is a complex process that must comply with the law that requires the lender to send you a full disclosure that confirms all of the loan details.
The actual loan documents are also prepared and arrangements for signing with a notary are made. Many times, Loan Doc’s are signed in the Escrow office. However since many REO’s contract with escrow companies outside of the area, arrangements may be made to have a mobile notary come and sign the docs with you, in your home or other place of mutual convenience.
Step Five: Approval
After the loan documents have been signed, notarized and returned to the lender, they are given a final review to make sure all of the “I’s” are dotted and the “T’s” are crossed. Although it is unusual, the lender may still require additional conditions are met. Once all of the conditions are met, the lender approves the loan, 
making their final commitment.
Step Six: Funding
After the lender makes the final commitment, the funds are wired to the Title Company which disperses them to Escrow. Escrow makes the disbursements to everyone who is entitled to any of the monies. Prior to funding, escrow would have issued a preliminary HUD-1, or net sheet. This form tells where every cent is going. If there are any challenges, that is the time – once money leaves escrow it is almost impossible to get back.
Step Seven: Recording
This is it! Recording will typically take place the day after the loan funds. Title submits all of the documents necessary to the County Recorder early in the morning and usually starting around 2:00 p.m. the Recorder will start releasing them, with the goal to have everything done by 5:00 p.m. Once the Deed has been recorded, title to the REO property officially changes hands and you are now the new owner.
There you have it – the loan process – over simplified maybe, but at least if give you an idea that there is a process that no one person has control over. Your Loan Officer can monitor what is going on and is often the messenger when there are issues that need to be dealt with.
On the other hand, your REALTOR® coordinates not only with the Loan Office, but every other aspect of what is taking place to close the escrow…and believe me, there is a lot more than can go wrong when you buy a Sunland – Tujunga Valley REO home.
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