Alhambra Real Estate
Alhambra Homes For Sale - Investing in Real Estates of Alhambra, CA

Is a Foreclosure Right For You?

By Lee Lieberg

So much of the talk among home buyers these days is about foreclosures. They are known in the industry as Real Estate Owned (REO) or Lender Owned because the Lender has gone through the foreclosure process following a default on the payment. The bank then owns the home and needs to sell it to get it “off the books”.

Five of the 25 homes sold in Alhambra last month were Lender Owned. This represents 20% of the sales. In some Southern California markets, REO’s account for up to 80% of the current sales. The five REO’s in Alhambra sold for $314 per square foot while the other 20 homes sold for $356 per square foot, a discount of 11.8%.

Lender Owned homes are often neglected and require more repairs compared to the average home that is owner occupied and been prepared to sell. REO’s can sit vacant for long periods of time causing problems re-connecting services, dead landscaping and general neglect.

The City of Alhambra has recently purchased several REO’s to refurbish and sell through the First Time Home Buyers Program. Alhambra’s Housing and Urban Development (HUD) funds help young families move into homes.

Vice-mayor Dr. Steve Placido said, “The city takes an abandoned house and creates a home for a young family. The pride of ownership is visibly evident, property values are maintained and all the homeowners of Alhambra benefit”.

It is a buyers benefit to consider REO’s along with other listed properties, yet there are things you should know about the difference of buying an REO versus a standard sale.

Dealing with a Bank can be quite different than dealing with a private party. Banks typically do not give any disclosures, offer no warranties, and do no repairs.

The negotiating process is also different for REO’s. Banks frequently list the property below market value to attract attention quickly. An auction like atmosphere is created where buyers bid against one another.

While Banks often set the price of homes to move quickly, they can be slow to respond. It takes patience to deal with a bank.

Many of the homes I have observed that went into foreclosure were less desirable to begin with, often due to a poor location, floor-plan or condition.

Don’t get caught up thinking that just because it is a foreclosure it is a great deal. If you are disciplined in your search, it is possible to capitalize on the bargains in today’s real estate market.

*Data was obtained from California MLS Alliance and deemed to be reliable. Lee Lieberg can be contacted at lee.lieberg@dilbeck.com.