Experts in San Francisco, East Bay, Peninsula, & Marin
Buying REOs (Foreclosures) and Short Sales in San Francisco
Although distressed properties often offer great opportunities for buyers in San Francisco, they have their own issues and unique process, so it's critical to have representation by brokers who know these types of properties well or the results can be disastrous. Before you even consider buying one of these properties we’ll make sure you know what to expect. It's important that you are well informed on potential problems, get estimates on costs to repair/upgrade (these properties have often been badly maintained) and understand other differences in process before ever looking at one.
1.Auctions on the courthouse steps: We do not recommend buying this way unless you have a lot of cash and have experience with this. Before even considering buying on the courthouse steps you need to know the following:
You will need all cash
You will be bidding against veteran investors who do this all the time
You will not be able to do inspections
You could potentially have issues with title, and you likely won’t know till after you own the property
Most agents/brokers (ourselves included) will not represent buyers on this type of property due to liability issues. If you do wish to have an agent/broker’s guidance, you will need to pay them out of your own pocket.
2.REOs (already foreclosed on by the bank): These are properties that have been foreclosed upon by the bank and are generally listed on the MLS. Although these usually use the same contracts and allow for inspections, there are some major differences in process that make it imperative you have an agent/broker/company with lots of experience in this type of sale to help you. Foreclosed properties in San francisco can also have issues with a clear title. We recently had a transaction on a foreclosure in San Francisco where the property had been transferred several times with a flaw in the legal description. Because we thoroughly review documents before making recommendations to the clients, we caught the error and got the bank to fix it at their expense prior to the close of escrow. This is just one example of why you need an expert representing you on the purchase of a foreclosure in San Francisco.
3. Short Sales: This type of sale is where an owner puts their property on the market for less than they owe. They need their lender(s)’ cooperation on this, and if there is more than one it gets much more complicated. This is why this is generally one of the most frustrating types of transactions for buyers because it can take months just to find out the bank will not move forward. Who the lender is also makes a difference as some are easier to work with than others, and the listing agent’s experience with short sales can also have huge impact on whether or not the transaction ever closes.
We have plenty of experience with short sales in San Francisco and can take some initial steps to figure out what the likelihood of being able to actually close the deal is before you waste your time and money on trying to buy this type of property.