helentsu0123 asked:
I’m looking to buy a Bank Repo home in California. What are some pitfalls to avoid? I’m particularly interested in learning whether the 2nd mortgage has any claim, or does it get washed off automatically? if so how can I confirm that is true with my case?
4 Responses to “what are some pitfalls of buying a Bank Repo home?”
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A thorough title check through a title company will discover any second mortgages. You need to check with your closing attorney/real estate agent for laws particular to California.
As far as bank repo homes, be very careful. Make sure to get a thorough inspection! Most people know for months beforehand that they’re losing their home and tend to ignore basic maintenance. People have also been known to take everything of any value out of the house, including wiring and ductwork.
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condition, condition, condition. your realtor and the closing company have to make sure they have done their homework on liens. If they miss one, you could be paying for it.
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When there is a foreclosure, the second (and subsequent) liens are wiped out at the sale. The first lien holder is required to perform title searches prior to completing the foreclosure to ensure that the title is clear. When you purchase the property, the title insurance you purchase will also verify that the title is not clouded.
The most common problems with bank owned (Real Estate Owned or REO) properties are related to the property condition. REO homes are often vacant for long periods of time and probably weren’t well maintained prior to becoming REO.
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When you find a property that you want to make an offer on, you can simply write in the offer that “Buyer to approve preliminary title report for liens,” or “seller to satisfy all liens at closing” – or something to that affect. The first thing a title company will do when escrow is opened is the the preliminary title report, which will outline any outstanding liens.
The last foreclosure home I sold had a $100 water bill lien on it, which the seller satisfied at closing.
Another pitfall, you will not get a seller’s disclosure and condition can be a big problem, so it is imperitive that you have a whole home inspection.