What is NOD NOT or REO ?

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This is the first official stage in the foreclosure process. The lender has a right to file the NOD at the very first late payment. In reality it’s usually 2~4 late payments before it’s done.The NOD is a recorded notice that the loan is “in default” but it’s not too late to simply pay the amount due and all is well.The delinquent amount will usually include late fees. IMPORTANT: this is only the amount owed to that particular lender. The owner also probably hasn’t paid their 2nd (or 3rd) and may even have Taxes or other liens overdue.

NOT- Notice of Trustee’s sale

Now the clock really starts ticking. The NOT is a recorded notice that a trustee’s sale has been scheduled. If all late payments, fees, and penalties aren’t satisfied the property will be auctioned off at the “courthouse steps” to the highest all-cash bidder. The minimum amount is usually whatever the lender needs to payoff the 1st  loan and other fees. The 2nd lender will get nothing! This is a huge incentive for the 2nd lender to buy the property at auction to protect his own interests.The “winning” bid, if there are any bids, gets the property as-is, including all liens (recorded or not). Title insurance is not available for up to 2 years. This is a significant risk for a buyer at the auction.

REO- Real Estate Owned by the Lender

Many properties don’t sell at the auction so they go to the Lender and become REOs. Normally the lender will use a Realtor to list the property on the MLS for sale. My experience is that the initial listing price is often too high. The good part for a buyer is that that they buy with normal legal and title protections and free of liens.

My Thoughts:

NOD

If you can make a low offer (very lowest side or retail values), but with good financing in place there are lots of opportunities here. Many of these purchases will be short-sales. That adds complexity to the deal but also adds incentive for a seller to take a low offer. If they have no equity to protect then they really care more about avoiding foreclosure.There will be lots of competition here. The NOD is public record. Act quick to be the first offer they see.

NOT

I don’t recommend NOT properties, unless the buyer is very experienced

REO

Basically these are treated the same as any other MLS listing. It’s more difficult to hammer-out a deal with a distant lender but not too bad. If you know values for that neighborhood I suggest that you ignore the asking price and offer what you think the price should be.

Probably the best spot is pre-NOD.

An Owner that is currently not in default, but will be soon is really motivated to sell quickly. Unfortunately many who bought 1~2 years ago will not be able to sell at current prices without bringing some money to the closing table. Very painful and usually forces a short-sale deal with the lender.

I can set-up free,automatic email for MLS listings based on your specific criteria. Even if you plan to buy off the NOD list it’s good to track the current MLS listings so you know values.

I offer free access to the foreclosure lists for Bay Area counties.

6/2009 – NOTE: Due to recent legislation, I can no longer get the foreclosure lists for distribution. I hope to be able to find a new source soon

Please call or email if there is any other way I can help.

Eric Haggin

925 336-6462

Eric@EastBayPlus.com