Robert Valenzuela - Your REO BROKER in the KEYS
Robert Valenzuela has significant experience in the marketing and sales of REO properties. He has developed an innovative marketing plan and provides exceptional customer service while specializing in this market. You can expect the following:
- Accurate and timely BPO's to help you determine a list price and repairs required
- Secure & re-key property as needed
- Coordinate expert professionals to assess, bid, and repair as ordered
- Coordinate utility turn-on's for property
- An aggressive marketing plan to give your listings maximum exposure including:
In addition to marketing of REO listings, Robert Valenzuela also has significant experience in working with investors. He has acted as a buyer's agent for numerous clients in search of REO's, foreclosure, pre-foreclosures, short sales, etc. The list of investors he works with has continued to grow over the years. This means more exposure for corporate clients looking for the quick sale of their REO homes.
You can count on Robert Valenzuela for all your Florida Keys area REO marketing needs. Stop wasting your time with brokers that are not giving you the complete and creative services that you deserve. Contact Robert today to begin helping you market your REO homes for more money, faster.
Our REO Team is ready to serve you!
REO - The Basics
Q. What does REO mean?
A. REO is an acronym for "Real Estate Owned."
Q. Why do people purchase REO properties?
A. The properties are often listed "as is." That makes them great opportunities for those who want to buy and fix up the properties and use them as a principle residence or an investment property.
Q. How is purchasing REO properties different from regular real estate purchases?
A. REO properties are owned by corporations not individuals which leads to significant differences in all aspects of the purchase.
Q. What should I know about buying at a "Trustee's Sale"?
A. Do your research before buying and use extreme caution before investing. Properties purchased at a Trustee's Sale are sold "as is" for cash. There are no refunds.
BPO's (Broker Price Opinions)
Q. What does BPO (Broker Price Opinion) mean?
A. BPO is an acronym for Broker Price Opinion. It is most commonly referred to as a BPO in the real estate community.
Q. What is the purpose of a BPO?
A. A BPO is performed to determine the value of a home. It is most commonly performed when a home is in default and the bank would like to know what the current value would be in the event of needing to sell the home if it becomes a REO asset. A BPO will also be completed prior to a home being listed for sale when it's a REO. BPO's are typically completed at the request of a loss mitigation or REO department. Local real estate agents are who most commonly perform a BPO because they are more familiar with their local real estate market.
Q. What is in a Brokers Price Opinion report?
A. The BPO is a combination of information. There are exterior BPO's and exterior and interior BPO's. All BPO's will require a drive by visual inspection of the property. The inspection of the property will require that you take a photo of the front of the subject, one photo that verifies the address, and usually one street scene photo. If you are doing an interior BPO, you will need to gain access to the property and complete several interior photos so the lender can verify the condition of the interior of the property. The data needed for a BPO will be three active sales comps that most closely match your subject property and three sold comps. These comps should all be within a one mile radius of the property and you will probably be required to upload photos or MLS printous of each comp. Lenders want to see the most closely matched property within the last 90 days to determine how long it will take to get this home sold and what price they would be able to sell the home in 90 days. The most recent sales are a huge factor to help you determine what the home would sell for within a 90 day period.
Q. Why do you need a Broker Price Opinion?
BPO's help lenders determine the value of a home. It provides them with a reliable accurate opinion of a property's value and what it would sell for instead of an appraisal that will tell the investor what the value may be. The investor will use a local real estate broker to perform a BPO because they are more familiar with the local real estate market. The investor wants to know what they would be able to sell the home for within 90 days. This value may be different than what an appraiser would come up with. Lenders are not in the business of owning real estate and will work with homeowners to help them avoid foreclosure; but in the event of a foreclosure, the lender will want to know what they can sell the home for within a certain period of time.
Everyone has seen the late night infomercials about how easy it is to buy real estate from the bank and make a quick buck. The reality is that it is not as easy as they make it sound. There are definitely buying opportunities available, but you need to understand how this process works. Learn everything you can so you are prepared.
REO vs. Foreclosure
REO (Real Estate Owned) is a home that the bank takes back from the owner that is not sold at auction. Typically, the bank will work with the homeowner to help them cure the default so they can avoid the foreclosure, because the bank does not like being in the real estate business. In other words, they do not want to have property on their books. The REO property is typically property that has a mortgage balance equal or greater than the value.
If you plan on attending a bank auction, you will also need to be prepared to not only pay the balance of the mortgage, but typically the bank will add on any other fees or costs that they have incurred up to that point. This could include accrued interest, attorney fees, and other costs that have been part of the foreclosure process. The other problem with auctions is that the bank will want you to have cash in hand if you have a winning bid on a property. Banks will not typically give you time to line up financing, and this can make it impossible for anyone other than a real estate investor to get in and purchase a home.
One more item that is a big concern: Be aware of what you buy. At an auction, you are not going to have the time needed to research any other liens that may be recorded against the property.
It is common to find most property being offered at an auction actually have more owed against the home than it is actually worth. Few foreclosures actually end up as a successful sale. If the property does not sell, this is when it goes back to the bank and becomes a Bank Owned Property, REO (Real Estate Owned).
REO Real Estate For Sale
If you are dealing with REO's, remember that the properties are now owned by the bank and free of any liens. The banks are still going to try and get the most money they can for the property, but they are more willing to take a quick loss and move on.
At this point, the bank may have to evict the tenant, do some repairs to the property, and get it ready for sale. Other items the banks will handle may include removing IRS tax liens and paying off HOA dues. The biggest benefit of buying bank owned property is you will have the opportunity to get title insurance. Title insurance will ensure that you do not have any additional liens recorded against the property. One of the issue you may encounter when buying property in distress are that you have other liens that have to be satisfied which can make it very difficult to get clear title insurance. Bank owned property will come with clear title.
Be aware: REO property may be right for you. Do your research before making any offers. If you do make an offer and move forward on the purchase, make sure that you are paying a fair price compared to others in the area. Don't get into a bidding war because the property appears to be a good deal. Many times, people chasing REO or auction property end up paying market value because they get into a bidding war. Foreclosures are not always the bargain you may think they will be.
How do banks sell REO property?
Every bank is a little different when it comes to selling REO property, but one thing remains the same. They all want the highest price possible and do not want to sell the property cheap. The other item that is similar among all banks is that they usually have a separate department set up to only handle REO property.
Typically, when you make an offer to a bank on an REO property, you can expect to receive a counter offer. Sometimes it will be much higher than expected, but banks do this to show investors that they are attempting to get top dollar for the property. If you really want to buy this home, expect that you will have to make a counter offer to the banks counter offer.
If the offer becomes accepted, you may experience a delay getting a final approval or because the offer may need to be approved by someone else at the bank. Typically, it can take an extra 4-5 days for your offer to get final approval.
What is the condition of the property?
Be prepared to buy the property as is or make a strong offer to get your repairs made. Banks will always push to sell the property as is to avoid coming out of pocket with additional money. Termite clearance is typically still covered by the bank, but you will have to work hard to have additional items covered. Make sure that termite clearance is included in your offer. Working with a solid Realtor can help your negotiations.
In addition, make sure you get a good inspection of the property so you know exactly what you are buying. Most contracts call for a time period to back out of the transaction should you find problems with the home. Make sure you have enough time to back out of the transaction if you need to and do not jeopardize your deposit.
Even though the bank wants to sell the property as is, make sure you try to get the bank to make the needed repairs or provide you with a credit at closing to complete the necessary work. If it really gets tough and you feel that you really want to back out of the deal because of the repairs, the bank may work with you instead of having to go out and find another buyer. This depends a lot on what the current market is doing in your area and how many other buyers the bank may or may not have.
Writing up an offer
Before the offer is made, make sure your real estate agent clarifies a few things for you. It is important that you ask the following:
- Are you selling the property as is? Is the bank willing to do any repairs?
- Have any inspections taken place for the property? If so, can you provide a copy of these inspections?
- Has the bank agreed to do any repairs to the home?
- How will the offer be delivered to the bank?
- How long should I expect the bank to take to respond to my offer?
The offer is typically sent to the bank. The listing agent will take the originals. At this point, you must have a little patience. It can take a few days for you to get a response from the bank. Many Realtors work weekends, but banks do not typically have anyone around after 5pm or on the weekends, so you will not get a very quick response.
Make sure you have a pre-approval letter or copy of a loan approval to go along with your offer. This will make the offer more attractive and help the bank make a decision. Make the offer clean and easy to read. Most agents will use a computer-based program for generating all of the paperwork.
Foreclosures - Commonly Asked Questions
Can I get a HUD home for as little as $100 down?
If you are strapped for cash and looking for a bargain, you may be able to buy a foreclosure property acquired by the U.S. Department of Housing and Urban Development for as little as $100 down. With HUD foreclosures, down payments vary depending on whether the property is eligible for FHA insurance. If not, payments range from 5 to 20 percent. But when the property is FHA-insured, the down payment can go much lower. Each offer must be accompanied by an earnest money deposit equal to 5 percent of the bid price, not to exceed $2,000 but not less than $500. The U.S. Department of Veterans Affairs also offers foreclosure properties which can be purchased directly from the VA often well below market value and with a down payment amount as low as 2 percent for owner-occupants. Investors may be required to pay up to 10 percent of the purchase price as a down payment. This is because the VA guarantees home loans and often ends up owning the property if the veteran defaults. If you are interested in purchasing a VA foreclosure, call 1-800-827-1000 to request a current listing. About 100 new properties are listed every two weeks. You should be aware that foreclosure properties are sold as is, meaning limited repairs have been made but no structural or mechanical warranties are implied.
How does a home go into foreclosure?
Foreclosure proceedings usually begin after a borrower has skipped three mortgage payments. The lender will record a notice of default against the property. Unless the debt is satisfied, the lender will foreclose on the mortgage and proceed to set up a trustee sale.
Are foreclosures an option?
A foreclosure property is a home that has been repossessed by the lender because the owners failed to pay the mortgage. Thousands of homes end up in foreclosure every eyar. Economic conditions affect the number of foreclosures too. Many people lose their homes due to job loss, credit problems, or unexpected expenses. It is wise to be cautious when considering a foreclosure. Many experts, in fact, advise inexperienced buyers to hire an expert to take them through the process. It is important to have the house thoroughly inspected and to be sure that any liens, undisclosed mortgages, or court judgments are cleared or at least disclosed.
What are problems buying foreclosures?
Buying directly at a legal foreclosure sale is risky and dangerous. It is strictly caveat emptor ("Let the buyer beware"). The process has many disadvantages. There is no financing; you need cash and lots of it. The title needs to be checked before the purchase or the buyer could buy a seriously deficient title. The property's condition is not well known and an interior inspection of the property may not be possible before the sale, says James I Wiedemer, author of "The Smart Money Guide Bargain Homes, How to Find and Buy Foreclosures"; Dearborn Financial Publishing, Chicago, 1994. In addition, only estate (probate) and foreclosure sales are exempt from some states' disclosure laws. In both cases, the law protects the seller (usually an heir or financial insitution) who has recently acquired the property through adverse circumstances and may have little or no direct information about it.
What types of foreclosures are there?
Judicial foreclosure action is a proceeding in which a mortgagee, a trustee, or another lienholder on property requests a court-supervised sale of the property to cover the unpaid balance of a delinquent debt. Nonjudicial foreclosure is the process of selling real property under a power of sale in a mortgage or deed of trust that is in default. In such a foreclosure, however, the lender is unable to obtain a deficiency judgment, which makes some title insurance companies reluctant to issue a policy.
What happens at a trustee sale?
Trustee sales are advertised in advance and require an all-cash bid. The sale is usually conducted by a sheriff, a constable, or lawyer acting as trustee. This kind of sale, which usually attracts savvy investors, is not for the novice. In a trustee sale, the lender who holds the first loan on the property starts the bidding at the amount of the loan being foreclosed. Successful bidders receive a trustee's deed.
How do you get financing for a foreclosure?
One reason there are few bidders at foreclosure sales is that it is next to impossible to get financing for such a property. You generally need to show up with cash and lots of it, or a line of credit with your bank upon which you can draw cashier's checks.
How do you find government-repossessed homes?
The U.S. Department of Housing and Urban Development acquires properties from lenders who foreclose on mortgages insured by HUD. These properties are available for sale to both homeowner-occupants and investors. You can only purchase HUD-owned properties through a licensed real estate broker. HUD will pay the broker's commission up to 6 percent of the sales price. Down payments vary depending on whether the property is eligible for FHA insurance. If not, payments range from the conventional market's 5 to 20 percent. One caution: HUD homes are sold as is, meaning limited repairs have been made but no structural or mechanical warranties are implied.
Where do I learn about HUD foreclosures?
One good source is their web page http://www.hud.gov.
Where can you find foreclosures?
In most states, a foreclosure notice must be published in the legal notices section of a local newspaper where the property is located or in the nearest city. Also, foreclosure notices are usually posted on the property itself and somewhere in the city where the sale is to take place. When a homeowner is late on three payments, the bank will record a notice of default against the property. When the owner fails to pay up, a trustee sale is held and the property is sold to the highest bidder. The financial institution that has initiated foreclosure proceedings usually will set the bid price at the loan amount. Despite these seemingly straightforward rules, buying foreclosures is not as easy as it may sound. Sophisticated investors use the technique so novices may find themselves among stiff competition.
"The Smart Money Guide to Bargain Homes, How to Find and Buy Foreclosures"; James I Wiedermer, Dearborn Financial Publishing, Chicago; 1994.
"Real Estate Principles"; Charles O. Stapleton III, Thomas Moran and Martha R. Williams, Dearborn Financial Publishing, Chicago; 1994.
"Real Estate Investing From A to Z"; William H. Pivar, Probus Publishing, Chicago, 1993.
Where can you find foreclosed HUD homes?
The U.S. Department of Housing and Urban Development acquires properties from lenders who foreclose on mortgages insured by HUD. These properties are available for sale to both homeowner-occupants and investors. You can only buy HUD-owned properties through a licensed real estate broker, whose commission will be paid by HUD. Down payments vary depending on whether the property is eligible for FHA insurance. If not, payments range 5 to 20 percent. When the property is FHA-insured, the down payment can go much lower. Each accepted offer must be accompanied by an earnest money deposit equal to 5 percent of the bid price not to exceed $2,000, but not less than $500. You should be aware that HUD homes are sold as is, meaning limited repairs have been made but no structural or mechanical warranties are implied.
Do you have to buy HUD homes through a realty agent?
You can only purchase a U.S. Department of Housing and Urban Development property through a licensed real estate broker. HUD will pay the broker's commission up to 6 percent of the sale price.
What about buying a foreclosure "as is"?
Buying a foreclosure property can be risky, especially for the novice. Usually, you buy a foreclosure property as is, which means there is no warranty implied for the condition of the property (in other words, you can't go back to the seller for repairs). The condition of foreclosure properties is usually not known because an inspection of the interior of the house is not possible before the sale. In addition, there may be problems with the title, though that is something you can check out before the purchase.
Options to Consider When Facing Foreclosure
If you fall behind in your mortgage payments, you will receive a lot of mailers offering to help you get out of your unfortunate situation. Many of these people are looking to take advantage of someone in a difficult situation. Often, someone falls behind on their mortgage due to a situation they had little control of. Robert Valenzuela is here to work with you and make sure that before you do anything, you know all of your options. He has helped many clients work through difficult issues with their home and help them find the solution that makes the most sense. The # 1 thing you need to make sure you never do is sign anything you are not familiar with. Do not sign anything with anyone offering a service that seems too good to be true. Many people are forced into doing something they don't understand and it often puts the homeowner in a very vulnerable position.
Option # 1 Sell Your Home
Depending on the market and area you live in, you may consider selling your home if you have enough equity to pay off your existing liens. However, you may not be able to do a regular sale if you owe more than what your home is worth. Using an experienced Realtor that works closely with banks will give you the time needed to sell your property at the highest price possible. Robert can help with this process and provide valuable insight and real estate experience.
Option # 2 A Short Sale - Not a Typical Sale
If your home is worth less than what you owe on your mortgage, a short sale may be the best option for you. Instead of just walking away from the property and severely damaging your credit, a short sale will allow Robert Valenzuela to negotiate with your bank and get a short sale approved and closed. Not everyone will be approved to do a real estate short sale. Banks are not eager to take a loss on their investment; but they also realize that if they take the home back through the foreclosure process, they will likely take a loss equal or greater to this amount. A short sale allows the bank to take the loss and move on because essentially, the banks do not want to own real estate.
Robert Valenzuela works directly with the bank to show them this may be the best option available. It is likely in this current real estate market, that the bank will approve the short sale and accept the loss in order to avoid taking a larger loss if the property were to come back to them as a foreclosure.
The bank will be very selective in what they pay for when you sell your home through a short sale. You need to be aware of the downside of doing a short sale and what the tax implications may be. Despite a short sale having some downsides, the positives of this can still outweigh the negatives of losing your home through a foreclosure.
The Mortgage Forgiveness Debt Relief Act of 2007, also known as Section 2 of H.R. 3648 was passed to eliminate the short sale tax consequence of having to pay the additional tax that would be due on the loss to the bank. Basically, any loss to the bank would be treated as ordinary income to you, because what was a loss to the bank became a gain to the former homeowner. Keep in mind that this will eliminate the federal tax, but you still may owe money to the state. You will need to speak with your tax professional to know what the consequences will be for your current situation.
Option # 3 Refinance Your Home
Refinancing your home and paying off the existing loan sounds easy and it may be an option that you have already pursued. In this current real estate market, it has become almost impossible to refinance your home if you have less than 10-20% of equity. Robert Valenzuela works with many different lenders and has access to many different types of loan programs, but the refinance market has become very limited. If your ultimate goal is to stay in your home and you can't refinance your home, your best option may be a loan modification.
Option # 4 Negotiate a Forbearance Agreement
Typically, a forbearance agreement is accepted by a bank when someone can show they had a temporary hardship and this is the reason they fell behind in their mortgage payments. It has become fairly common. Two items a bank will look for when they consider a forbearance is 1) the reason you fell behind in your mortgage payments, and 2) proof that your financial difficulties were a one-time occurrence and are not likely to happen again.
The forbearance takes the amount you owe and does one of two things: One option is to spread the amount you owe out over a period of six months. The other option is to add the amount owed on to the back end of your mortgage and have it paid at the end of your mortgage term. This may be an option that you were unaware of.
Option # 5 Deed in Lieu of Foreclosure
The advantages for the homeowner are to avoid foreclosure and not go through the difficult process that it entails. It will release all or most of the liability from the homeowner and allow the bank to turn around and sell the property much sooner without the bank having to spend additional time and money going through the foreclosure process. This would be a good option to consider if you feel that there will be no benefit from you selling your home or doing a short sale.
Option # 6 Do Nothing - Just Let it Go
You can always let your home go into foreclosure and do nothing. Sometimes the situation seems so overwhelming that this may be a good option. We don't recommend that you do this, and would suggest that you talk to someone so you can determine if any of the options above would make more sense. It's important that you talk to someone that you can trust, and not someone that is looking to take advantage of someone in a difficult situation. There are many real estate scams, and you don't want to become a victim because you didn't seek a second opinion. You may have some options that you are unaware of.