Bank Owned Rivermark Townhome

Type: Townhouse
Status: Active
List Date: 11/03/09
Price: $633,900
Last Modification Date: 11/03/09
Location: 4464 HEADEN WY, Santa Clara, CA 95054 (map)
Bedrooms: 3
Bathrooms: 2.5
Approx. Sq. Ft.: 1716
Approx. Lot Size: 1,306.sf
Approx age: 6
MLS#: 80952017

This is the latest REO or bankowned property for sale in Rivermark, Santa Clara. There are a number of these Park town homes currently in default and will likely end up as more bank owned listings. The difference now is that they are likely to be snatched up by the increased buyer activity that has been mounting in past weeks. I don’t expect this town home to make it a full week on the market with out multiple offers.

For those of you shopping for bank owned homes and expecting deals, understand that Bank Owned or REO properties sell at market prices. That isn’t to say that because of their state or poor showing condition they are likely to sell lower than a conventional sale, I still feel Bank Owned homes and still a good deal. If you have all cash now they are especially good as many lenders are taking lower priced all cash offers over higher financed offers.

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Single Family Res

Type: Detached Single Family
Status: Active
List Date: 05/17/09
Price: $474,500
Last Modification Date: 05/18/09
Location: 2038 SAN RAFAEL CT, Santa Clara, CA 95051 (map)
Area: 008 – Santa Clara
Bedrooms: 3
Bathrooms Full: 2
Bathrooms Half: 1
Approx. Sq. Ft.: 1534
Approx. Lot Size: 5,795.sf
Approx age: 51
MLS#: 80924264
Old MLS# (6 digit): 80924264

This bank owned home is a great buy in Santa Clara. Its the popular 3 bedroom 2.5 bath Windsor floor plan in Darvon Park. The home is in move in condition. The kitchen was remodeled some years back, both bath rooms are very client and have new vanities with granite countertops. The back yard is very good sized, the home has expansion options which leave plenty of space in the back yard.

Downsides are that there has been some settling which is typical for these older homes, but this one has a bit more than typical. The roof needs replacement, the windows are old, and the back yard and front yard need some attention. Overall for a price of $475K, this is a good Santa Clara home at a very good price.

Remark:

3020 MARK AVE., SANTA CLARA

REMARKS:

Listed by Realty World.

Rivermark Townhome Short Sale

Rivermark is a master planned community developed in 2002 by Lennar, Centex and Shea Homes encompassing over a 1500 single family and town home units. Also around the Rivermark development is the Miraval Homes Luxury condo development and Mission Gardens single family homes, townhomes, and condo’s.

Many of these units have resold in the last few years since their initial releases, leaving some home owners at peak prices resulting in short sales and no opportunity to refinance.

Currently in the Santa Clara Rivermark location there are 14 condo short sales and 1 bank owned condo. There are no single family short sales or REOs at the moment.

Miraval Condo

A good portion of these short sales are in the Miraval Condominium Complex. Miraval is a Luxury condo complex providing nicely appointed units with great amenities in the complex. Currently there are 5 short sale units for sale in Miraval. One bedroom units starting at $280K and 2 bedroom units at $400K.

As for the Rivermark development currently there are only townhomes availables. Which says alot about Rivermark and the fact that the single family home values have not been hit too hard. Many times buyers offten ask what is a better investment a townhome or a single family home. As you can see single family homes rarer in Rivermark have held up very well so var with all the market pressures.

For a list of active short sales and bank owned properties in the Santa Clara Rivermark area follow the link below.

Rivermark Short Sale Townhomes

What is a Short Sale?

Short sales occur when the value of the property is less than the encumbrances or liens on the property.  The property is still owned by the owner and not the bank.  It is being sold with the understanding that the total liens on the property will not be satisfied by the proceeds of the sale.  Therefore the owner will need the lien holders approval to be able to sell the properety.  This can take months to get approved, and may not end in a successful sale.

What is Foreclosure?

When a property is in foreclosure, the owner has stopped making payments and the lender has given the borrower a written Notice of Default that the payments must be brought up to date or the property will be sold off. The notice is a public document (which is why so many websites offer foreclosure lists). It normally takes about two missed payments for a lender to issue a Notice of Default, but not always.

Notice of Trustee’s Sale, after receiving a Notice of Default, the owners of a property allow their home to be foreclosed, then a Notice of Trustee’s Sale gets posted by the trustee. This is usually the trustee holding the primary note. In California, it’s not the bank that forecloses, it’s the Trustee.

Once the trustee decides to foreclose, it goes to a Trustee’s Sale. This sale is held on the courthouse steps in the applicable county. Usually, the bank buys its’ own property from the trustee for the full amount owed on the primary mortgage. In the current market, the price the bank pays to obtain the property is often more than market value. Any subsequent mortgage holders get nothing. The “courthouse steps” is typically not a good place for a potential end-user to buy the property – it’s geared towards investors who buy many properties at wholesale prices. In fact, it can be a downright unfriendly environment if you don’t know how the game is played.

What is an REO?

Once the bank has purchased the home, it is now foreclosed and is called an REO (Real Estate Owned). The bank will then usually list the property at or near full market value and place it on the local MLS.

Finally on the Market. At this point, it shows up on the MLS as an REO and your Realtor can show it to you. Once the bank purchases the home at the Trustee’s Sale and it’s now an REO, the bank tries to get as much for it as possible. The price usually goes back up to at or very near market price.

We submitted an offer at $407,000 and there were 4 other offers at that time.  In this Santa Clara neighborhood alone there were 3 other bank owned properties on the market, the next lowest in price was $461,000 and needed just about the same amount of work.

The response from the seller was a highest and best counter in the form of an email.  For those of you who are unfamiliar with this strategy, the seller comes back to all the interested parties and asks them to submit their highest and best offer.  We responded knowing that this home was under priced and offered $420,000 as our highest and best.  That was 3 days ago and are still waiting for a response from the bank.

The other property was in the San Jose East Valley.  A 3 bedroom two bath home listed at $225,000.  There are a number of REOs (bank owned homes) in this part of San Jose.  Most need quite a bit of repair and have unpermitted additions, converted garages and all sorts of code violations.  A unique characteristic about this San Jose REO is that it only had a garage conversion that could easily be converted back.  Other than the garage conversion the home was very close to move in ready and was certainly the best home in that area of San Jose for the price.

This San Jose REO received a total of12 offers.  We are currently awaiting response from the bank.  This experience is very common as active buyers in Santa Clara County that are targeting these REO deals have slim pickings for homes that do not require too much repair.  As a result, they often get quite a bit of interest when priced low and will often sell at market prices.  This is not to discourage you from trying, rather to set your expectations on pursuing REOs.

Get Pre-Approved and Be Ready to Act

In the REO market, expect the competition to be fierce especially in the bay area where investors or homebuyers like yourself are anxious to take advantage of these prices. It’s not uncommon for there to be multiple offers on bank-owned properties. Just as you are looking for a bargain, so are many other buyers.  In the areas that you are considering the fewer the number of REO’s the higher likelihood that you will encounter stiff competition when it comes to buying.  To ensure your chances of buying an REO in cities like Sunnyvale, Cupertino, Santa Clara, and Saratoga, yes I said Saratoga.  You should be financially prepared to make a down payment and you should have a pre-approval letter from a lender in place before making an offer.

Know Where and How to Look

In Santa Clara County most if not all REOs are  listed on the Multiple Listing Service and can be found on the majority of websites that feature properties for sale. There are also several websites that specialize in foreclosed properties. You can get a head start and see which properties are in the process of foreclosure on RealtyTrac.com or find homes that have already been foreclosed upon by checking sites like CaliforniaMoves.com, Trulia.com and Zillow.com. Many lenders also have their foreclosed properties listed directly on their websites.

Hope for the Best, Prepare for the Worst 

In all likelihood, you will not be “wowed” when walking through the door of an REO. Most are sold “as is.” In the months leading up to foreclosure, the homeowner may have disregarded maintenance and let the condition of the home deteriorate. Do not be surprised if you see homes stripped of appliances, light fixtures and any other items that can be sold. In the worst case scenarios, homes fall victim to vandals and transients who take advantage of a vacant property. It’s not always a pretty sight, but for buyers who are looking for a challenge, or who can afford the time and effort involved in buying an REO, these types of properties may be right for you.

It May Take Longer Than You Expect

Each bank/lender works a little differently, but they all have similar goals. They want to get the best price possible; they have no interest in “dumping” the real estate they own cheaply. Generally, banks have an entire department set up to manage their REO inventory, and in this current market, with the increased number of bank-owned properties those departments are often back-logged for days, if not weeks and thus cannot always respond quickly to offers or other inquiries.  In Santa Clara County these banks or asset managment companies work with only a few brokers or agents who can have anywhere from 10 to 50 listings at a time.  Sometimes getting a timely direct response from these agents is not always possible.

Once an offer to purchase is made, banks generally present a “counteroffer.” It may be at a higher price than you expect because the bank has to be able to demonstrate to its investors, shareholders and auditors that they attempted to get the highest price possible. You are then free to accept, reject or counter the bank’s counter-offer.

Your offer or counter-offer will probably have to be reviewed and approved by several individuals and/or other companies. As such, this process may take several days to complete.

It is important when purchasing a bank-owned property that you understand that the timing can sometimes be longer and drawn-out than a typical resale.  However, do not confuse an REO transaction with a short sale which can often take upt o 3 months to complete.

Understanding the Property Condition

Banks typically sell a property in “as is” condition. Some banks will agree to provide a Section 1 Pest Certification, but not unless that requirement is included in the final contract. Banks will usually allow you to get all the inspections you want (at your expense), but they probably will not agree to do any or all repairs. Offers to buy REO property may include an inspection contingency period that allows you to terminate the sale if the inspections reveal defects that the bank will not correct and that you might not want to accept. Be aware that some banks require use of their own contract forms which do not include the same types of provisions as standard Realtor forms. In those situations you should review the bank’s purchase contract documents with your own agent and understand the unique terms that the lenders are creating. Even if you have agreed to buy the property “as is,” you may request that the bank make repairs or give you a credit after you have completed the inspections. Some banks will re-negotiate to save the transaction instead of putting the property back on the market, but that possibility should not be taken for granted. Some banks may not provide financing on their REOs but it doesn’t hurt to ask.

Making the Offer

Before making an offer, have your Agent contact the Listing Agent and ask the following questions:

• Are there any inspection or repair reports?  This answer is usually no.  However if the home has been in contract before the previous buyer may have done inspections and they agent is obligated to disclose those inspections.
• What work has the bank performed and/or what work will the bank agree to perform? Usually no again.
• How long do you anticipate that it will take the bank to accept an offer?  Typically in Santa Clara County I have come to expect the same day or up to 3 day lag times on responses.

Offers are usually faxed or uploaded to the bank. The Listing Agent needs your originals. There is generally no formal presentation. Keep in mind: nothing happens on evenings and weekends as banks are closed. The keys to remember are: You should have sufficient money available to put down a reasonable deposit; you need to be pre-approved by a reputable lender; your offer should contain reasonable, straight forward contingencies and the offer should specify a closing date that is within a reasonable amount of time. There should be no unique wording outside the parameters of a normal contract or your offer may be rejected.  Remember "as is" and highest price, thats what the bank is looking for.

What are Some of the Pitfalls to Watch Out For with REOs?

Determine all fees associated with purchasing the property.

• There may be hidden fees like liens, unpaid taxes, penalties, etc. to contend with.
• How low will they go? Lenders may not be willing to negotiate the price down from market or close to market. This is especially true in areas where home values have fallen further than lenders want to acknowledge.
• Be prepared for a counter. Because the sale of bank-owned properties are becoming increasingly popular and therefore, competitive, we are seeing cases in which banks are countering at an amount that is above the original list price. These actions can discourage some buyers.

There Are No Guarantees in Buying REOs
 
On the surface, it might sound like a bank-owned property is a steal but if the bank wants to sell its inventory on the open market for the amount of money that was once owed to the bank, it may not be as good of a deal as one might think. Couple that with the fact that bankowned properties are not always left in the best condition; a great deal of work and money may be needed after escrow closes to improve the property.

When considering the purchase of an REO, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling that may be needed. In most cases, banks do not want to indefinitely hold on to their inventory as it isn’t in the bank’s best interest to let the property sit. Therefore, some banks have incentives to price a home for less than market value just to get rid of it. However, while it is true that banks are typically anxious to sell bank-owned property quickly, they are also strongly motivated to get as much as they can for it.

The bottom line is that although bargains with bank-owned properties exist, it is important to understand the pitfalls that may also exist in buying REO property. That is why it is imperative that when you do decide to explore the purchase of a bank-owned property that you do so with the aid of a professional, experienced Realtor, like myself, who will guide you through the intricacies of this type of transaction.