What is an REO?

An REO is a property that is owned by a bank, lending institution or investor in which the property has been acquired through a legal foreclosure proceeding or from a “Deed in Lieu of Foreclosure.”  REO stands for Real Estate Owned or ORE, Owned Real Estate.

What is a foreclosure?

It is a legal process.  When someone borrows money they promise to pay back that money.  When the borrower cannot make the payments as agreed and the lender wants to be paid the money that is owed, the lender starts a legal process known as a foreclosure. 

In California, the money that is borrowed to purchase a home is secured by property in a “Deed of Trust.”  The Deed of Trust states that if you don’t make your payments, pay your taxes, or take care of the property, etc.  then the lender has the right to sell the property to pay the debt.  This process is called a foreclosure.  There are many requirements and steps in this process and very specific timelines.

The foreclosure process starts when a “Notice of Default” (NOD) is filed with the county.  It is a specific notice and it is public.  It states who filed the notice, who owes the money, how much is owed, and the property address, along with other information.

The borrower has a certain amount of time to pay the money that is owed to the lender.  If they cannot pay the amount owed, then the property is advertised to the public and sold in a public auction, often at the county courthouse steps.  If no one wants to purchase the property for what is owed, then the property is transferred to the lender and it becomes a “bank owned property,” REO or ORE.  The home is then often called “a foreclosure.”

For a detailed analysis of this process and its ramifications, please contact your attorney.

What is a Short Sale?

A short sale is the process and/or the property that is sold for less than what is owed to the lender.

When someone wants to sell their home there are many costs that are involved in the sale of the property.  If the loan is more than the house is worth, the lender must decide whether they want to negotiate with a potential buyer or start (or complete) the foreclosure.

This process is complicated because the lender does not own the house.  They must work through the owner/borrower.  The lender wants to be sure that the seller/borrower cannot make the payments and does not have money available to pay the bank what is owed.  The lender wants to be sure that there is good reason why the borrower is not making the payments.  So they require the borrower/owner to complete financial statements and document their earnings.  The lender also wants to know what the current market value is for the home.  Finally, they want to know that the new buyer can qualify and purchase the home.

This process takes time, patience, knowledge and often is not completed successfully.

How can I buy an REO or bank owned property?

First, find a reputable and knowledgeable real estate agent to help you.  Your real estate agent will be able to help you evaluate properties and areas as well as many other services. 

Complete the loan entire loan process with a knowledgeable lender.  This means providing all of the necessary documents requested by the lender.  When this process is complete, have the lender give you a “formal loan approval.”

Determine what your budget will be and how much money you will put aside for needed and necessary repairs because most bank-owned properties are sold in their present condition without any repairs.  Almost all properties will need paint, carpet, landscaping and some appliances.

Only when you have completed these steps are you ready to “go shopping” for a house.  The purchase process and time frames are similar to any purchase.

When I am ready to write an Offer, what do I do?

Have your agent prepare the Offer on a CAR contract.  Go to our website,, and print out the special instructions under Offers Status of REO Property.  Follow the instructions and submit your Offer to   Please submit your Offer with a summary or cover letter.

The following questions are specific to the Offer process and can be answered without calling the TopDogREO office:

What is the current status of the house?

Go to MLSListings to check the status; then go to the ‘Offer status’ tab to check the status and/or you may call 408-971-1200 for a daily status update.  Please be advised that we cannot change the status on the MLS until we have received the signed paperwork (counters and addendums) from the Buyer and Seller.

How and when are Offers presented?

We are required by law to present any Offer that is received by us, unless instructed by the Seller not to do so, until the close of escrow.  Generally, we present Offers as we receive them; however, most lenders require the property to be on the MLS for 72 hours before they will consider Offers.  In the current market we often have multiple Offers on a property and therefore often have a cut-off time for the acceptance of Offers.

As a practical matter, the lender or asset manager will not generally look at additional Offers after they have accepted an Offer.  The lenders will not accept “back-up Offers.”

Offers are presented through the asset manager/lender’s website or by email following a detailed format and instructions.

How will I know if you have received my Offer and if it has been accepted?

All offers submitted to will receive an email acknowledgement. Please add to your span/junk mil safe list to ensure you receive this communication

When will I receive a completely ratified contract with all Addendums from the bank?

It may take several days for the paperwork to be returned to us.  It varies with each lender/asset manager.  We will forward it to you as soon as we receive it.

What is the acceptance date and when does my property inspection, finance and other contingency dates start?

Your contract and acceptance starts the day the contract is signed by the Seller OR as stated in the Seller’s Addendum.  Please be aware of this date as the Seller considers it important.  Failure to follow these dates may result in losing your deposit if you fail to complete the transaction.

What is a “per diem” and when is it charged?

It means “by day” and is an amount the bank will charge you for every day the closing is delayed after the scheduled close of escrow.  We suggest you advise your client and your lender to sign their documents ahead of schedule.  Also be sure to note the close of escrow as specified in the Addendum.

How is the commission calculated?

Commissions are based on a NET Sales Price.  This is the Sales Price less any concessions, for example, closing costs or repairs.

What can you tell me about the house?

Nothing.  Remember that the bank has never seen the property.  We will provide you with an AVID, as will your agent, which we complete after a visual inspection of the property.  Generally, there are no reports or inspections on the property.  It is your responsibility to inspect the property and get the reports you need to make an informed decision.

What did the other people Offer on the house?  Why didn’t they take my Offer?

I cannot tell you that information.  I want to be fair to everyone.  We ask you to send in your “highest and best” Offer in the beginning because we do not know what the Seller may do.  The Seller may take the best Offer in a multiple Offer situation.  Understand the best Offer for the Seller is based on many factors and the Offer that they accept is the best Offer for the SELLER and their specific needs.

When is the best time to talk to you directly?

We have tried to answer as many questions as we can here.  If you need further assistance call our office at 408-971-1200.  Leave your name and number and we will return your call promptly.  You can also email us at
17-Mile Drive
Pebble Beach, Ca