Buying Lender Foreclosures or REOS
Purchasing a home from a lender that foreclosed on the property may appear to present an opportunity and may, in fact, turn
out to be one. However, there are risks attached to purchasing lender foreclosures, also know as REOs (Real Estate Owned).
Following are some things to consider before making an offer to purchase an REO:
- A percentage of owners vandalize or sabotage the property out of spite before it goes back
to the lender. While it is illegal and highly unethical, some leave scorched earth by doing
- Pouring concrete into plumbing fixtures and both interior and exterior drains;
- Removing roof tiles, creating holes, and then replacing the tiles;
- Cutting low voltage wires;
- Fraying high voltage electrical wires in locations not likely to be seen such as attics;
- Creating leaks in air conditioning condensation lines that can lead to water damage and mold; and
- Damaging underground irrigation systems
- Foreclosure homes are sold in "as is" condition by former lenders that never occupied the
property. Consequently, you must rely on your own inspection to a much higher degree than when you purchase from someone who
has been living in the property and is obligated by law to disclose everything that would effect prospect's decision to buy
or not to buy, and the price he or she would agree to pay.
- Foreclosure homes are properties that no one purchased at the public foreclosure auction.
- The cost of repairs must be paid with cash. You cannot include such costs in the loan amount.
If you decide to make an offer on a foreclosed property, you should hire a licensed general contractor to inspect the entire
property before making a commitment. Caution is highly advised.
"As Is" Real Estate Contracts
An "as is" clause in a real estate purchase and sale contract does not insulate the transferor or seller from the duty to disclose defects or the requirements of California Civil
Code 1102 et seq. "As is" language serves to give notice of patent defects and means that the buyer accepts the property
condition which it is reasonably observable by him or her. If augmented by language indicating that the buyer is relying on
his or her own inspection of the property, it may also relieve the seller of the duty to inspect for defects or to disclose
matters that the seller should know but does not. Also, "as is" language in a real estate sales contract does not protect a
seller from liability for fraud.
In California, sellers of residential real estate have a legal duty to disclose any facts materially affecting the value or
desirability of the property that are known or accessible only to the seller and not known to or within reach of the diligent
attention and observation of the buyer. (California Civil Code Section 1102 et seq.) Notwithstanding, sellers are not liable
for latent defects in property of which he or she did not know about and had no reason to believe existed.
Transferors of residential real estate must provide purchasers with a Real Estate Transfer Disclosure Statement ("transfer
disclosure statement"). Any attempt to waive this requirement is void as against public policy. This requirement applies to a
sale, exchange, installment land sale contract, lease with an option to purchase, any other option to purchase, or ground
lease coupled with improvements. Delivery of the transfer disclosure statement must be by personal
delivery or by mail to the prospective transferee.
The transfer disclosure statement form includes the transferor's disclosure of information regarding all of the following:
- The physical condition of the property;
- The existence of hazardous materials or dangerous conditions;
- Encumbrances on the property, including any encroachments;
- Easements or other matters which may affect the other party's interest in the property; and
- Lawsuits against the seller threatening to affect or affecting the property.
Transferors of residential property must also disclose to potential buyers, if applicable, that the property is in a natural
hazard area, that the property is subject to a lien created under the Mello-Roos Community Facilities Act, or is subject to an
assessment lien collected in installments to secure bonds issued pursuant to the Improvement Bond Act of 1915. In addition,
cities or counties may require that sellers or their agents deliver to purchasers the Local Option Real Estate Transfer
Disclosure Statement as set forth in the California Civil
Whether you are a buyer or a seller, if you need legal assistance, we can help. For your convenience, we accept Master Card or Visa, Our real estate attorneys can
assist you with nearly any real estate matter.
Multiple Listing Service – MLS
The Real Estate Industry's
Most Important Selling Tool
A multiple Listing Service, or MLS, is a marketing database established by its member Real Estate Brokers who cooperate with each other by providing accurate data about properties each broker has for sale. It is a mechanism for listing brokers to offer compensation to brokers representing buyers.
Nearly all real estate brokers are members of an MLS. This includes the large franchise brokers as well as small independent brokers.
An MLS has the effect of making every brokerage firm equal in that every property listed for sale can be sold by any real estate agent employed by any member broker. Given that most MLS services have hundreds of broker members with thousands of real estate agents, it is most common for a property listing to be sold by a firm other than the listing firm.
The concept of the MLS is that each broker firm working through its real estate agents will attempt to sell any of the properties listed because commissions are split between the listing firm and the selling firm with each firm compensating its own agents.
An MLS with its large inventory of listed properties, is designed to provide every real estate agent access to the total inventory of available properties. Most importantly, the shared system of property listings gives every property equal exposure to the market. This arrangement is in the best interest of sellers, buyers, brokers and real estate agents.
When it comes to selling or buying real estate, the size of the firm is of little importance. It is the performance of the individual agent that matters. His or her dedication, knowledge, and experience is what really matters.
Buy Real Estate with your IRA or 401K
Los Angeles County:
Acton, Agoura, Agoura Hills, Agua Dulce, Alhambra, Altadena, Arcadia, Arleta, Artesia, Avalon, Azusa, Baldwin Hills, Baldwin
Park, Bassett, Bell, Bell Canyon, Bell Gardens, Bellflower, Beverly Hills, Bouquet Canyon, Box Canyon, Burbank, Calabasas,
Calabasas Hills, Canoga Park, Canyon Country, Carson, Castaic, Century City, Cerritos, Chatsworth, Claremont, Commerce,
Compton, Covina, Cudahy, Crystalaire, Culver City, Del Sur, Diamond Bar, Downey, Duarte, East Los Angeles, East Rancho
Dominguez, El Monte, El Segundo, Encino, Firestone Park, Flintridge, Gardena, Glassell, Glassell Park, Glendale, Glendora,
Granada Hills, Hacienda Heights, Hawaiian Gardens, Hansen Dam, Hawthorne, Hermosa Beach, Hidden Hills, Highland Park,
Hollywood, Huntington Park, Industry, Inglewood, Irwindale, La Canada Flintridge, La Crescenta- Montrose, La Habra
Heights, La Mirada, La Puente, La Verne, La Canada, Lake Hughes, Lake Los Angeles, Lake View Terrace, Lakewood, Lancaster,
Lawndale, Leimert Park, Lennox, Leona Valley, Lincoln Heights, Littlerock, Lomita, Long Beach, Los Angeles, Lynwood, Malibu,
Manhattan Beach, Marina Del Rey, Maywood, Mission Hills, Monrovia, Monte Nido, Montebello, Monterey Park, Mount Baldy, Mount
Wilson, Newhall, North El Monte, North Hills, North Hollywood, Northridge, Norwalk, Pacoima, Palisades, Palmdale, Paramount,
Pearblossom, Pico Rivera,
Pomona, Quartz Hill, Rancho Dominguez, Rancho Palos Verdes, Rancho Park, Redondo Beach, Reseda, Ritter Ranch, Rolling Hills,
Rolling Hills Estates, Rosemead, San Dimas, San Fernando, San Gabriel, San Marino, San Pedro, Santa Clarita, Santa Fe Springs,
Santa Monica, Saratoga Hills, Saugus, Sherman Oaks, Sierra Madre, Signal Hill, South El Monte, South Gate, South Pasadena,
Stevenson Ranch, Studio City, Sun Valley, Sun Village, Tarzana, Temple City, Toluca Lake, Topanga, Torrance, Tujunga,
Universal City, Val Verde, Valencia, Valley Village, Van Nuys, Venice, Vernon, Walnut, Walnut Park, West Covina, West Hills,
West Hollywood, West Los Angeles, West Toluca Lake, Westchester, Whittier, Wilmington, Windsor Hills, Winnetka, Woodland
Camarillo, Channel Islands, Faria Beach, Fillmore, Moorpark, Newbury Park, Oak Park, Oak View, Ojai, Oxnard, Port Hueneme,
Santa Paula, Saticoy, Somis, Simi Valley, Thousand Oaks, Ventura (San Buenaventura), Westlake Village.
Aliso Viejo, Anaheim, Balboa Island, Brea, Buena Park, Corona Island, Costa Mesa, Cypress, Dana Point, Foothill Ranch,
Fountain Valley, Fullerton, Garden Grove, Huntington Beach, Irvine, La Habra, La Palma, Ladera Ranch, Laguna Beach, Laguna
Hills, Laguna Niguel, Laguna Woods, Lake Forrest, Los Alamitos, Mission Viejo, Newport Beach, Newport Coast, Orange,
Placentia, Rossmoor, San Clemente, San Juan Capistrano, Santa Ana, Santa Ana Heights, Seal Beach, Stanton, Tustin, Tustin
Foothills, Villa Park, Westminster, Yorba Linda.
San Bernardino County:
Adelanto, Apple Valley, Barstow, Big Bear, Big Bear City, Chino, Chino Hills, Colton, Crestline, Fontana, Grand Terrace,
Hesperia, Highland, Joshua Tree, Lake Arrowhead, Landers, Loma Linda, Montclair, Morongo Valley, Needles, Ontario, Rancho
Cucamonga, Redlands, Rialto, Running Springs, San Bernardino, Twentynine Palms, Upland, Victorville, Yucaipa, Yucca Valley.
Anza, Banning, Beaumont, Bermuda Dunes, Blythe, Cabazon, Calimesa, Canyon Lake, Cathedral City, Cherry Valley, Coachella,
Corona, Desert Hot Springs, East Blythe, East Hemet, El Cerrito, Glen Avon, Hemet, Highgrove, Home Gardens, Homeland,
Idyllwild-Pine Cove, Indian Wells, Indio, La Quinta, Lake Elsinore, Lakeland Village, Lakeview, Mecca, Mira Loma, Moreno
Valley, Murrieta, Murrieta Hot Springs, Norco, Nuevo, Palm Desert, Palm Springs, Pedley, Perris, Quail Valley, Rancho Mirage,
Riverside, Rubidoux, San Jacinto, Sun City, Sunnyslope, Temecula, Thousand Palms, Valle Vista, Wildomar, Winchester,
Santa Barbara County:
Ballard, Buellton, Carpinteria, Gaviota, Goleta, Guadalupe, Hollister Ranch, Hope Ranch, Isla Vista, Lompoc, Los Alamos, Los
Olivos, Mission Canyon, Mission Hills, Montecito, Orcutt, Santa Barbara, Santa Maria, Santa Ynez, Solvang, Summerland, Toro