How to Negotiate a San Diego Foreclosure or REO

Foreclosure Buying Tips
Foreclosures Ahead

by Roberta Murphy

So many real estate investors and home buyers have their sights set on buying a foreclosure, REO’s and bank owned properties, hoping to buy real estate at prices substantially below market. But how to negotiate and navigate them to closing?

REO’s and bank-owned homes are a “congested” area of the San Diego real estate market–and bidding strategy is required.

Foreclosure and short sale listings in our coastal climes are coming to resemble e-Bay transactions. It’s so frustrating for a buyer to submit a bid, only to find out there are 12 other competing bids on the table. But don’t give up. Here are some of the things you can do to increase your chances for successful foreclosure (as well as short sale) bidding:

1. Prior to submitting an offer, we speak with the listing agent to “seek guidance” for our buyer’s offer–especially when we are in a competitive situation. It doesn’t always work, but when we know how other offers stack, we stand a much greater chance of winning the bid.

2. Be thoroughly pre-qualified with a direct lender and have that letter on hand to submit with your offer. If a cash offer, be prepared to show proof of funds that can be submitted with your offer. Feel free to black out account numbers.

3. Propose a fast closing date with no contingencies. Lenders like speed and certainty–at least from you. Lenders may or may not reciprocate.

4. Present a strong earnest money deposit. For example, we recommend at least $5,000. on almost any offer of substance. That deposit, if your offer is accepted, goes towards down payment and/or closing costs. Any excess would be refunded to you. A strong deposit indicates a strong buyer.

5. Finally, and most importantly, do not get emotionally involved with the transaction and the home until you know your offer is accepted.

Another thing we suggest–and when there are no other offers on the table–is to ask the listing agent to place the property as “pending” if you submit a reasonable or full price offer. It’s a long shot that occasionally works–and helps insure a successful transaction. No buyer feels secure with the prospect of overbids possibly trumping his or her offer. We have had this happen on a couple of occasions and watch listing status carefully.

We have found that foreclosures generally close more quickly, compared to short sales in the San Diego market. Lenders are also more demanding with foreclosures and will frequently insert hefty per diem charges into their counters for any delays that result from buyer’s side. We have a transaction now, where lender wants a 3-week closing and $100. per day for any delays beyond that time. Buyer will likely need an extra 15 days and will gladly pay the additional $1500. because the deal still makes a great deal of $en$e.

Good luck in finding your San Diego dream home, whether it’s a short sale, equity sale or foreclosure. Your timing could hardly be better with record low interest rates and dwindling inventory levels. Below are some currently-available short sales and REO’s in selectes cities and neighborhoods:

Aviara Short Sales

Carlsbad Short Sales

Fallbrook Foreclosures and REO’s

Fallbrook Short Sales

Bonsall Short Sales  (rarely available)

Del Mar Forelosures and REOs (also rare)

Downtown San Diego Foreclsoures and REOs

Downtown San Diego Short Sales (92101)

Encinitas Short Sales (rare)

La Jolla Foreclosures and Bank Owned Homes

La Jolla Short Sales

Oceanside Foreclosures and REO’s

Oceanside Short Sales

Rancho Santa Fe Foreclosures and Bank Owned Homes

Rancho Santa Fe Short Sales

San Marcos Foreclosures and REOs

Aviara Short Sales