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Not too many people stand on the courthouse steps & buy a home in Monterey area at a foreclosure auction these days.  If you are thinking of buying a foreclosed home it is usually going to be a “REO” property or Real Estate Owned. This means the house has already gone thru the foreclosure process.  How do you do this, how do you get started?

First of all most REO properties are going to need work. This could just be cosmetic work such as new paint, new carpet, landscaping and misc. repairs.  So if you are comfortable dealing with a “fixer upper” property this could be a good way to buy a property.  But some of the REO properties could need alot of work including structural problems.  You will not have the safety net you would have if you buy from a home owner.  Banks do not need to fill out disclosure statements on any problems the house may have.

If you are buying from a bank there are two main options. You can try buying from the bank prior to them listing the house with a real estate agent. Or you can buy an REO property thru a realtor after the home is listed.  If you have done this a number of times, you can represent yourself. But be prepared to do a great deal of investigation regarding the property.  You will want a termite report, a home inspection and quite possibly a number of other reports.

If you decide to sign up with an agent to represent you, they should be willing to do a great deal of legwork on this.  You will need to get prequalified thru a lender and have your financing ready in advance.  You will need a substantial downpayment in most cases.

As a Real Estate Broker Associate on the Monterey Peninsula, I will work with a small number of buyers interested in REO or other distressed properties.  This is not for the faint of heart.  This is not for someone who wants to do a “quick flip” of the property. Just because it is an REO property does not mean the bank will take just any offer.  Distressed properties like these can be good for someone who can do alot of the work themselves.  I have one client who wants to buy a couple of properties for their children. So they are looking at long term investment. If you are an investor try out the Real Estate Investment Calculator.

An individual can exclude (not pay taxes) on up to $250,000 profit on a home if he/she has lived in the home for two of the last five years.  If you file a joint return you can exclude up to $500,000 in most cases.  The home must be or have been your primary residence.  Any gain/profit on the sale of your house above these amounts are taxable.  You will be able to deduct most items related to the sale of your home as well as any capital expenditures. The Internal Revenue Service has several publications that may be of interest to you.  If you don’t meet the two out of five years rule for living in your home - there can be a partial exemption in some cases such as having to relocate for a job, health reasons, etc. .  Consult a good accountant before you sell your home! 

Hi, I am Eileen Begley Broker Associate with Coldwell Banker DelMonte Real Estate.  We are located in Carmel, California. I handle Real Estate Sales on the Monterey
Peninsula for the communities of: Carmel, Carmel Valley, Pebble Beach, Big Sur (South Coast), Monterey, Pacific Grove, Seaside and Marina and other county areas such as the Highway 68 corridor.  My goal is to provide you with factual - not industry slanted information on Real Estate on the Monterey Peninsula, as well as other useful info and links for buyers and sellers. Please check out our buyer reports & seller reports on my web site.