For Buyers

Over 88% of Santa Barbara home buyers start their research online. It is important to realize that the agent you pick to represent you be tech savvy, and have a good handle on the uses of the internet as it relates to buyers in this market.

What I find my buyers are up against in this market is the understanding of how foreclosures, short sales, and bank owned properties work.

Understand that the “short sale” is a seller owned home who is trying to negotiate with his bank to bring them a buyer at less than what they owe on the property. The first step is for the buyer and seller to agree on a purchase price and complete their transaction. Then the seller submits this to his bank and they may or may not accept your offer; they may counter it, or just refuse it. This can take approximately 30 days with a well run short sale department, but can be quite lengthy with an bank overburdened by these sales. It gets more complicated if there is a second loan on the property. The second loan also want to get paid, and if  the first loan is not offering them a sufficient amount, the second may refuse to cooperate with the sale. If the seller or buyer (by putting in more money for the second) does not remedy the situation with his second loan, your purchase agreement may fall apart. This then becomes the an issue between the seller and his bank whether it will go to foreclosure and auction and ultimately end up owned by the bank.

For the REO or Bank Owned Property, these properties have already gone through the Notice of Default and Foreclosure and Auction process. The trustee has then deeded the property back to the bank, (if not purchased at auction) who prepares to put it back on the market with the local realtors. This can take quite a while, as the banks are working on the inventory they already possess, and it goes to the bottom of the pile. Each bank is different as to how they handle their foreclosures. Bank of America has a software program developed for bank owned properties, and everything is done through that program by the realtors.

But once it does hit the market, the activity in most cases can be quite vigorous. Multiple offers are not uncommon with these listings. Note that most of the bank owned properties are going to want the buyer to prequalify with their chosen bank and get a letter from them. It doesn’t mean you can’t use your chosen lender, but it is a requirement to submit your offer. In any case, in ALL offers, you must have spoken with your lender and have them ready to provide you with a prequalification letter on the property you choose to make an offer on. In all offers you will be required to show “proof of funds” for your down payment, and many lenders are also requiring 3-6 months of reserves in cash in your account. Check with your lender on those requirements.

My website at has a great variety of resources for your buyer questions, and I am always available to share that information with you by email at or by phone at 805-610-5403.


Barbara Reaume
Coldwell Banker
Real Estate Advisor GRI SRES CN SFR
Cell: (805) 610-5403
Fax: (805) 969-0262
Lic #00888832