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Buying REO Homes in Orange County - 4 Rules for Success

Posted by Leslie Eskildsen on Tuesday, September 23rd, 2008 at 9:03pm.

Rule #1: When buying an REO Home in Orange County, you must get pre-qualified by the bank that owns the property.

You may have a preferred lender - someone you trust that you've used in the past, or a friend you trust who's already pre-qualified you, but the bank that owns the REO home is probably losing money on the deal, and they'd like the opportunity to win your business. In some cases, the bank won't even look at your offer if you haven't been prequalified by them! The only potential downside for you is that having another lender "run your credit" may have a small impact on your FICO score, especially if you've already had several lender enquiries on your credit. Usually, the extra effor is worthwhile in that it increases your desirability to the lender. Since you've qualified under their specific program, you may have a leg up on other potential buyers that claim to be qualified, but haven't met the same standard that you met.

Pre-qualification can be done on-line or by calling a bank representative - your Realtor will give you the details. Whatever method you choose, act quickly, and remember that although your Realtor is there to serve your needs, protecting your credit is your own responsibility. Identify theft is a real risk in today's world, so ake good advice, but protect your personal financial information.

Remember - get pre-qualified by the bank that ownes the home - it's free, easy, and powerful. Your Orange County home is one step closer!

Rule #2: Provide proof of funds for a down payment

The bank has already been burned once, so they're only interested in selling foreclosed property to well qualified buyers. Submit a copy of your most recent bank or savings account statement showing that you've got the cash ready. Just remember to avoid identity theft you should mask all personal information, such as account numbers and social security numbers - if your name is visible on the statement that should be sufficient.

Rule #3: Make a large deposit - 3% or more of the purchase price

A large deposit tells the bank that you are serious, and may give you a real advantage over competitive offers. Often banks will require a deposit of up to 3%, or even 10% on an all cash offer. Even if they don't require a large deposit, they may use it as a screening technique to weed out less serious buyers. Funds to honor the deposit check must be available on the date of the check, but you may elect to use a different account before it is cashed when submitted to escrow.

Rule #4: Provide a fully executed Purchase Agreement

"Fully executed" means you take the time to sign ALL the paperwork in the Purchase Agreement, including all the associated addendums and disclosures, as well as any required bank disclosures. If there is more than one buyer, all of them should sign everywhere required. Offers that are not fully executed are screened out by the bank, and may even be ignored, since once the offer is accepted the process will move very quickly. A missing signature will cause delays that the bank simply won't accept.

Use these rules to your advantage

The four rules above are simple, but they do require a little bit of work and planning. Following these rules will ensure that you are a competive buyer in the foreclosure market in Orange County. If you follow these rules, you'll be on your way to buying your new Orange County home!