Marco Huerta and his wife Youngmin Bae were recently featured in the LA Times for buying their first home with Redfin. We decided to catch up with them and learn more about their experience buying a foreclosed home owned by the bank, also known as an REO (real estate owned).
Marco and Youngmin’s Story
We started looking for our first home in 2006. My wife and I both grew up in homes and were sick of living in apartments. We originally worked with a traditional agent and put in an offer on a home, but decided to pull out of the deal before our inspection contingency expired. After taking a break for a couple of years, we stumbled upon Redfin and loved using the map-based search. We signed up for updates on new listings, price reductions and scoured the details pages to monitor prices and movement of similar homes for sale.
We got pre-approved with our bank early on to set our price range, which was below $500,000. We knew we wanted a 3 bedroom, 2 bathroom house in a quiet neighborhood. We went on five Redfin home tours around Glendale, Mount Rose, Eagle Rock and Burbank and loved our field agent, Todd Lethbridge. He was knowledgeable about the homes, always laid out the pros and cons for each property and never glossed over any potential issues. Redfin agent Joyti Goundar helped us on a few offers that didn’t pan out. But then in November 2008, we found an REO home in Burbank that we loved. We were able to go see it the day after it went on the market. The home was owned by Countrywide (now owned by Bank of America), and they require that buyers get pre-approved with them to put in offer on homes they list for sale. So we started the pre-approval process and put in an offer two days later, but learned that the bank had already accepted an offer from someone else!
Feeling a little discouraged, we decided to take a break for a few months. But then one day in late January, my wife decided to check Redfin and noticed that the home we had found was recently re-listed! We sprung into action and called Joyti who quickly helped us put an offer together. We then got pre-approved with Countrywide, so they knew we meant business. Our offer was accepted the next day — even for $10,000 below list price!
Marco and Youngmin’s Advice for First-Time Buyers
1. Be pro-active: it may seem like there’s a lot of inventory out there, but there’s also a lot of competition. The good homes will sell fast. We’re so glad we checked Redfin again because we probably wouldn’t have known our home was back on the market until it was too late. If you’re looking at an REO, check to see if you need to get pre-approved with the bank that owns the home. We were lucky to know that Countrywide required us to be pre-approved with them; so when the home went back on the market, we were ready to make an offer.
2. Get a thorough inspection: we knew our house might need some repairs, so in addition to the general inspection, we brought in a chimney inspector, sewage and pipes, and an electrician to evaluate the home for potential issues. Banks usually never pay for repairs, but I decided to create a detailed outline of all the problems and potential risks associated with some of the issues with home and presented it to the bank. They ended up giving us around $4,300 for repairs!
3. Choose a mortgage lender carefully: we monitored rates on Bankrate.com and researched all the different types of fees associated with loans. We met in-person with lenders at our local credit union as well as Wells Fargo. After comparing each good faith estimate carefully, we ended up going with Countrywide where we originally got pre-approved. They gave us the best rate and even waived our appraisal fee.
The market is tough, but don’t get too discouraged. If the right house comes along, make sure you’re prepared to make an offer and you just may end up with the perfect place!