If you are educating yourself to enter the brave world of twenty-first century San Diego real estate, it is important to know about bank owned properties. A bank owned property is a great way to get a home for less than you'd pay if it were listed by a traditional seller, but the process is more complicated than a conventional home purchase. Here is a quick guide to get you familiar with the process of purchasing a bank owned property (a property in foreclosure).

 

A bank owned property/foreclosure property - also referred to as a REO (Real Estate Owned) home is much different from a standard real estate listing. If you know how to properly bid on a REO property, you will get a great price on a new house for you and your family.

 

When a homeowner does not make their mortgage payments on time and in full, the lender will put the home into pre-foreclosure. If the homeowner is not able to make the back payments on their mortgage, the lender puts the home into foreclosure. Then, the home is sent to auction by the lender to attempt to recoup losses and sell the home.

 

If the home goes to auction and is not bid on or the bids are below the minimum amount accepted by the lender, the house is then officially called an REO property..... the number of houses that qualify for this category is increasing every day.  As foreclosure rates climb, so do the number of REO homes. The San Diego area has seen a record increase in the number of these properties in recent months.

 

Lenders are often willing to part with REO homes for much less than you would pay in a traditional real estate transaction. However, many potential home buyers and real estate investors in the market are savvy about foreclosures. That means you are likely to be up against some stiff competition when you bid on discounted properties.

 

In order to compete with other bidders, it is often a good idea to enlist the help of an educated real estate professional. It is very easy to get caught up in a bidding war for a house and overpay for it. A savvy real estate agent will help you determine what your highest bid should be. They are also able to help you find other properties that may end up being a better deal that suit your needs when the price on the original home that caught your eye gets too high.

 

In addition to other bidders, REO houses often have more repair issues than traditional real estate listings. When a home is foreclosed, the residents don't always leave peacefully. Sometimes, they intentionally damage the home by leaving a clogged sink running or by throwing paint on the carpet. It is important to know that the home might need repairs after you purchase it.

 

Make sure to get at least one if not multiple home inspections to make sure the property you intend to buy is structurally sound and free from defects. Home inspections are done by independent companies for a fee. It is much better to pay a little money up front to learn about the condition of the home before you buy it. This will avoid an unanticipated major repair bill and is well worth the investment.

 

Banks and lenders are not interested in holding onto a large inventory of foreclosed homes...... they really want to sell the assets as quickly as possible. That being said, numerous bidders are waiting to scoop up a great deal on this type of property.

 

The process for buying a real estate owned property and a traditional real estate listing is very different. To make sure you get the best deal available, a trained and skilled San Diego real estate expert is your best bet. They will serve as your trusted advisor and advocate throughout the entire process.