Downtown Los Angeles, CA · Member since 2014 · 4 posts · 0 votes
On some forums people say they will only take all cash buyers, of course i wouldn't even consider purchasing until I have professional guidance on my side as these properties come with surprises. But what's the real answer, are all foreclosures and REOs for cash buyers or can I obtain one of these properties on a conventional loan?
Yup, you can get conventional financing on a REO property, if it's not too beat up.
The rule of thumb is that it must be a complete and functional home. For example, it can have a neglected, old, and gross kitchen, but if everything works and it's a complete kitchen, then it's not a deal breaker.
So, really, it's very property specific if you can or can't get a conventional mortgage on it.
By contrast, and REO that has had vagrants come in and strip out all the copper pipes, steal the oven, etc, that's a no go. If all that stuff is going to take $15k to fix, and you have to break into the home to fix it without the REO seller's permission, that's just all a bad recipe.
Third example, let's suppose all it is missing to be a complete house is a $400 oven and a single shower head. Great, put a $400 oven and shower head in prior to the appraisal. That $400 is going to be way less than the discount points on hard money, no?
Downtown Los Angeles, CA · Member since 2014 · 4 posts · 0 votes
9y
I see, and thank you for the scenarios. This seems more like it speaking from the lender side, what about the seller side. Will the seller accept an offer coming from a conventional loan rather than an all cash buyer? Are the odds more than likely itll be a big waste of time finding a seller to accept my offer?
Real Estate Broker · LA & ORANGE COUNTY CA -Multi Family · Member since 2016 · 374 posts · 132 votes
9y
@Jordyn Njoroge This is what i found. Realize that in the REO game, cash offers beat those with a mortgage, and a conventional mortgage beats an FHA or VA loan. If you have an FHA or VA loan, you're going to have a tougher time landing a bank REO, as you'll either get rejected from multiple deals by cash or conventional borrowers, or because the homes need have too many repairs to qualify for your loan.
Regardless of the type of loan you take, you must get pre-qualified before making any offers. The banks will not even consider taking your offer without a pre-qualification letter from a reputable lender.
Downtown Los Angeles, CA · Member since 2014 · 4 posts · 0 votes
9y
@Varinder Kumar My lender is in tact, just looking for better deals on the market with a conventional loan. All in all it seems possible. Thank you all for your input!