REO (Bank Owned)
REO (Real Estate Owned, or Lender Owned, or Bank Owned)
A kick out clause refers to language in the contract which permits the seller, in some cases, to cancel the contract with the current buyer. The current buyer is “kicked out” of contract. Another expression for the same idea is a “release clause” – the seller can release the buyer under some situations.
This is a bit of a surprise to most Silicon Valley home buyers, who tend to think that they can walk away from a property during their contingency time frames, but a seller is stuck with them, no matter what. That’s simply not true!
In the last few years, both the CAR and PRDS contract forms have been updated. Both now include language that specifies the seller’s right to cancel the contract. Both parties have rights and responsibilities. Failing to do what one has promised to do in the purchase agreement could potentially find that home buyer out of contract and without that home to buy. There are many shades of gray, and few things are automatic. If a seller is going to give a buyer the boot, there will be a “notice to perform” tendered first.
Let’s talk specifics. When can the seller kick out or release the buyer? Continue reading
Mini update for Santa Clara County as a whole as of September 17, 2012 for houses in SCC:
Actives = 1295
Regular sales for sale = 1157 (89%
Short sales for sale = 95 (7%)
Bank owned houses for sale = 43 (3%)
Sold in the last 30 days = 859
Regular sales closed in last 30 days = 675 (79%)
Short sales closed in last 30 days = 151 (18%)
Bank owned houses sold in last 30 days = 33 (4%)
It seems that although short sales are in increasingly smaller part of the inventory of available homes, they are highly desirable and are showing up in the solds at twice their ratio of actives. Put another way, the absorption rate looks to be higher. Let’s check the math on the moths of inventory:
All houses in SCC: 1295/859 = 1.51 months of inventory
Regular sales in the county: 1157/675 = 1.71
Short sales in SCC: 95/151 = .63 moi (63% of one month!)
Bank owned homes: 43/33 = 1.3
All of these numbers are low, low, low – but the short sales are the lowest of all!
POST FROM APRIL 22, 2011:
Yesterday we looked at the types of home sales around Silicon Valley by price point. Not terribly surprising, most of the short sales and bank owned homes were in the lowest price ranges. Today we’ll look at this type of information not by pricing tier but instead by geography – in other words, by either town, city or district of San Jose (area). This post will not cover every area but will be a sampling a few communities, mostly on the west side of the valley (since that’s primarily where I work).
By way of reminder, the small image to the left reflects Santa Clara County’s houses for sale as a whole – all areas and all price points. (You can see the full sized image by clicking on it.) The green area represents “regular home sales” and the brick red and light orange signify distressed properties listed on the MLS for sale (red is short sales and orange is bank owned or REOs). Next let’s see a few regions within the county to see how things are faring geographically.
1. Almaden Valley area of San Jose – homes listed for sale by type – very few distressed properties on the market!
Almaden is a lovely southwest San Jose suburban community (zip code 95120) that grew up initially with the cinnabar or mercury mining activity. Today it’s an upscale area of more expensive homes than most of the county, it enjoys really good schools and scenic views of the coastal range as well as the Santa Teresa Foothills. Housing here is costly but residents love the quality of life. Since the cost of homes for sale here is high, it’s not super surprising, after seeing yesterday’s post, that there are very few distressed homes on the market here. Next we’ll check the other extreme…. Continue reading
Silicon Valley home buyers (and sellers) are faced with a myriad of questions and choices when completing or reviewing residential real estate contracts to purchase the property. One of them, early on, is whether or not a particular day is chosen for closing escrow or if instead it’s a number of days from contract formation (acceptance) to closing.
Which is better?
The are pros and cons to each approach, of course. Many buyers want to be able to plan, without any ambiguity, when they will move in to their new home. (For some this can be a matter of feng shui, astrology or a sense that some days are more fortuitous than others.) This can work if negotiations are not protracted.
With distressed sales, though – bank owned properties (REOs) and short sales – and sometimes with multiple offers, the negotiations time frame can be hard to predict and if you pick one particular date, you may well have to change it later or find that you don’t really have enough time because a week or more gotten “eaten up” with counter offers, waiting for a bank or seller to respond or other delays. In those cases you may want to have the flexibility of writing in the length of escrow (number of days) rather than picking a certain date.
As always, talk with your professional real estate licensee for guidance as each case may be different.
In Silicon Valley, it seems the more expensive the neighborhood, the less likely it is that you’ll find a bargain. Saratoga CA home buyers who are working hard to get their feet in the door during this opportunity in the market (with low prices and even lower interest rates) are scrambling to find a creative way to make their budget line up with this high end enclave’s real estate prices.
One solution is to attempt to buy a distressed property in Saratoga – namely foreclosure or a bank owned (REO – real estate owned by the bank) house, condo or townhouse or a pre-foreclosure or short sale listing.
There aren’t many of them to choose from, which makes the few that do come available very prized by motivated buyers.
Below please find a list of all available distressed properties for sale in Saratoga, CA. This city has several school districts so if you are looking for one in particular, please contact me and we can chat about finding you that perfect home.
Note: some of the homes which have a “Saratoga mailing address” with a Saratoga, CA 95070 address actually belong to a neighboring city (or the county), such as Campbell. So you may see some homes in the list below which say Campbell, for instance. Want to read more about Saratoga and its neighborhoods? (I grew up there and graduated from Saratoga High many years ago…) Please also check out this article on my popehandy.com website: Saratoga Real Estate and Saratoga Homes for Sale”. Also check out the Saratoga California real estate market update post on this blog.
Check back frequently – this list is updated automatically!
Frequently I’m asked if I (or another real estate licensee or agent) can help a consumer to purchase a foreclosure. There are some nuances to this answer, but in short, it depends.
There are several stages in the foreclosure related sales in California. Often, homes somewhere in this quagmire are listed on our Silicon Valley area MLS or multiple listing service. If a property is listed in the MLS, then yes, we Realtors can help home buyers with a distressed sale purchase.
- Pre-foreclosure (where payments have been missed and a Notice of Default or NOD has been filed – often, but not always, these homes are on the market and included in the MLS. If they’re in the MLS, I can help. Often these are short sales (but short sales are not always in pre-foreclosure – they may not have missed any payments).
- Trustee’s sale, or actual foreclosure on the courthouse steps. No role for a real estate agent here. There are some big caveats and warnings! First, often what’s owed against the home is more than it’s worth and the only way to purchase a home here is to pay off all the debts (so it may not be much of a deal!). Second, if you buy here, you get NO inspection contingency and must pay cash for the house. End of story – no backing out. Worse, you cannot inspect it ahead of time!
- Bank owned or REO. These are usually listed on the MLS and if so, I can help you with it. Sometimes banks hold onto them between the trustee’s sale and prior to listing them with a broker. Often this is only for a month or two but sometimes it’s longer. If it’s not on the MLS, it’s very very hard, or maybe impossible, to buy it.
While it’s not hard to locate homes where owners have missed some payments, it should not be assumed that these houses are either for sale or that the owners have any intention of selling them. In my opinion, it would be harassment if consumers showed up on their doorsteps trying to purchase a house where a payment has been missed. Most, maybe all, of the residents there would be offended. They may be trying to get a loan modification (a friend of mine got one approved last week!) or have family & friends helping them to get back on track. If it is not listed in the MLS (which you can find at www.MLSListings.com – the public portal of our agent multiple listing service), the odds are overwhelmingly against it being available to you.
Recently I met with some of my past clients, who purchased their San Jose house close to the height of the market (2005-2007). In those days it was a hot seller’s market (not unlike many parts of the Silicon Valley real estate landscape today, actually), and buyers routinely purchased their homes “As Is“, meaning no repairs provided by the sellers. Desperate to get in when prices were appreciating fast, it seemed that most home buyers said “we’ll take care of it after we own it“.
But they forgot.
Actually this didn’t just happen during the peak of the market here in Santa Clara County – there’s always a percentage of consumers who buy As Is to get a better price. They have good intentions about taking care of the mold, the termites, the roof and whatever else might not be either in good working order or free of infestation. But once they move in, the “to do list” doesn’t seem to have those items as a high priority, and over time they completely fall through the cracks.
Pull out your old file, find your inspection reports and review them, especially if you are preparing to sell your home
Today I want to encourage you to dig out your old home inspection and pest reports, dust them off, and have a look. Did you need to address a problem with termites, electrical issues, leaks? Is there something to take care of with the roof, gutters, dry rot or fungus? All of those things do not self-correct, but instead grow worse over time. Continue reading
The Silicon Valley real esate market is heating up but it’s not heating “evenly”. Some price points and areas (or school districts) enjoy a hot seller’s market while other segments are lagging. A big factor in the overall health of the realty market in the San Jose area is the percentage of listings which are distressed properties, meaning short sales and bank owned homes. Today we’ll see the ratios of these homes to the regular sales using graphs to get a quick visual take on the market trends and statistics.
Today we’ll look at homes listed on the MLS in all of Santa Clara County (including San Jose, Campbell, Los Gatos, Saratoga etc.) by price point. All of the graphs in this post will reference houses and duet homes combinesd(about 99% houses), not condos or townhomes.
Overall, it looks like about 1/3 of all homes for sale in the county are distressed sales. Next let’s look at this data by price point and then we’ll check it by area. The images below will be smaller but the colors will represent the same elements in each one (green being regular sales, brick being short sales and light orange being REOs).