Foreclosures: What you should know BEFORE you make an offer, Part 1
November 12th, 2007categories: Anatomy of a Chico CA Real Estate Transaction, Chico Buyers, Chico CA Foreclosure Listings
This is part 1 in a series of helpful hints to purchasing foreclosures in Chico, CA.
“Foreclosure” sees to be the new buzzword around Chico, CA these days. Everyone wants to score that awesome Chico CA real estate deal, and people are looking to the foreclosures in Chico to make it happen. In truth, most people are actually wanting “REO” property. In other words… the bank now holds the title.
The process of purchasing an REO property can be significantly different than your average residential purchase. Not always, of course, but often enough that you should know ahead of time what you might run into.
Before offering on a Chico, CA REO property, you should know:
1. Not all REO’s are phenomenal deals!
Just because the listing agent labels it “foreclosure!” doesn’t mean that it is a steal. I work with a least one bank that takes the appraisal price and ups it by 5% to arrive at the asking price. Make sure that you are working with a competent Chico Realtor who can help you ascertain whether or not the property is priced competitively.
2 . The bank has no emotional ties to the property.
Unlike a typical homeowner, the bank is emotionally detached during the negotiating process- it’s completely impersonal. Truly, your offer is just one of many files sitting in a pile on somebody’s desk. The strategies that might help you score in a traditional transaction are unlikely to work with a bank employee located in Texas. They have a specific set of rules and time-lines to follow, and little else matters to them.
3. The bank operates on their schedule, not yours.
“Time is of the essence” in a typical transaction. If, as a buyer, you allow the seller 3 days to respond to your offer, they will usually respond as quickly as possible in order to facilitate the transaction. A bank may respond in an hour, or it make take several weeks to get an answer! Don’t make the mistake of thinking the bank isn’t considering your offer- sometimes the contract has to be approved by a series of 5 or 6 people at the company before you get the good news. Conversely, I’ve found that once an offer is approved, the bank will steamroll over anybody or anything that gets in the way of closing the deal on time. Usually, they want to close within the same month the contract is approved!
Coming soon! What you should know BEFORE you make an offer, Part 2.
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Have specific questions on the foreclosure process? I’m glad to help, whether you are a seller facing foreclosure, or a buyer looking to purchase. Give me a call! 530-864-5407.
Ok Sandi can I just say I love this excellent article. We are explaining this every day to home buyers and it’s one of the most misunderstood processes. It’s great that Chico home buyers have an expert like you to work with when pursing foreclosures or short sales. – Cyndee
Sandi,
That is a great post. Sounds like there are plenty of foreclosures in the Chico real estate market. I have found that buyers are very misinformed about REO deals. All the investment gurus will tell you that banks will jump on real low offers just to unload the property. In most cases, they will not. They want as much for the property as anyone else would. Thanks for helping educate the deal seekers out there.
Hello Sandi – This is a great article for anyone looking to buy a foreclosure in Chico, California. I totally agree with your comment that not all REOs are a good deal. Anyone wanting to buy a home in Chico should talk to you and find out if a foreclosure is right for them. It could save some home buyer a bunch of aspirin!
Sandi- this post is so important, on one of the most misunderstood aspects of investing in real estate, in Chico CA or anywhere else. Chico home buyers beware, you need a good Buyer Agent on these transactions. Thanks for being there Sandi. Terry McDonald- your guy in Charlotte NC.
Sandi,
I enjoyed this article on foreclosures in Chico. Many buyers think that foreclosure property offers a tremendous opportunity. You outlined valid concerns of the real estate market. Thanks!
Sandi,
Boy, did you hit the nail on the head! I don’t know if you have had any similar instances or not in Chico, CA., but here in Blue Ridge , GA. we had an instance where the bank actually had a foreclosure with about 40% more than appraised value in it! To say the least, that loan officer no longer works there. I am glad you as a Realtor, are there to consult and look after those buying short sales in Chico, CA.
-Chad
[...] With all the news about the increased number of foreclosures across the country, many buyers are looking this way to try to find that once in a lifetime deal. Consider yourself warned by Sandy at Chico Home Search; there are several things you must know before making an offer on a foreclosed property. [...]
There are good companies out there actually trying to help people. But unfortunately there are also bad ones that are trying to take advantage of situations. I purchased 2 forclosures and have been happy with my purchases.