I know its been a while since I last blogged. I have been swamped with bank owned properties (REOs) and bringing sales to fruition. Over the last few weeks I have found that there are certain fees that buyers may not be aware of when purchasing REO properties compared to short and fair market sales.
The first is an overinflated escrow fee. The escrow fee for a home that is $200,000 is generally around 250-300 dollars, but if it is an REO than the fee increases to $850.00 minimum just for being with an REO.
The next is region specific. If it is in California, Title and Escrow companies are separate in Southern California and combined in Northern California. Since most of the REO companies deal with Southern California companies be on notice you are going to pay fees for each instead of one lumped fee.
Finally, realize that you are going to pay an inflated fire insurance fee of around $1500.00 and a pad fee of $500.00 for extra incurred expenses. Realize that the excess amount of these will be refunded back to the buyer at the close of escrow. But the buyer needs to realize that they need to front this money.
Make sure when selecting an agent or before purchasing an REO to ask your agent about extra fees that could be incurred in the sale.