Buy a distressed property from Citibank/Citimortgage

Despite the slow comeback of the nation’s housing market, there are still a growing number of bargains that can be had if you are willing to make your way through the catalog of distressed properties a bank or mortgage company may be holding. Citibank/CitiMortgage is certainly one great place to start your pursuit. As one of the world’s largest banking entities, the company has accumulated thousands of properties in various stages of distress in its real estate portfolio. Buying a distressed property may be the way to get into the home of your dreams for far less money than you might expect. Since some of the rules for buying a distressed home differ from the rules of buying a regular home, you'll want to do some research before you start.

Check out our comprehensive guide on buying homes from foreclosure listings.

Stages of distress

Before you seriously embark upon researching the distressed properties available from Citibank/CitiMortgage, you may want to acquaint yourself with the various types of “distress” a property can fall into. There are, generally, two broad categories of distressed property you will find on the portfolios of institutions like Citibank/CitiMortgage:  properties in pre-foreclosure and foreclosed properties.

• Pre-foreclosure – a distressed property in pre-foreclosure is one where the homeowner or borrower has fallen behind with enough payments to trigger an official Notice of Default from the bank or mortgagee. In most cases, this is 120 days (though some mortgages have a shorter default period and others have a more generous one.) Any official Notice of Default will spell out how long the homeowner/borrower has to bring the mortgage out of default status. One standard option a homeowner has in these cases is to sell the property to another party and use some of those proceeds to satisfy the arrears. It’s very rare that a bank or mortgage company will intervene at this stage of the process and actually sell a property in pre-foreclosure, though it does occasionally happen.
• Foreclosed properties – if a homeowner fails to meet the conditions spelled out in an official Notice of Default within the allotted timeline, this is generally where the bank will step in and foreclose. While some foreclosure proceedings still allow a window of opportunity for the homeowner to sell a property or offer some other remedy to stave off official foreclosure (including a growing number of states that are requiring the lender and borrower sit down in managed arbitration), once a bank or mortgage takes back a property in foreclosure, it is generally referred to as a Real Estate Owned or REO property. If the bank/lender is offering to sell the foreclosed property for less that what the current balance of the mortgage is (including accumulated late payments and related fees) the sale is known as a short sale. (There are some occasions where a homeowner/borrower will try to enlist a buyer in a private short sale for a distressed property and if you are considering one of these transactions remember that any private short sale has to be finally approved and accepted by the lender.)

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Citibank/CitiMortgage distressed property sale specifics

If you're trying to buy distressed property, Citibank/CitiMortgage has a large selection. It also has some specific steps you will need to take in order to find and make a proper, competitive offer. You can find REO properties from Citibank/CitiMortgage available in your area by visiting a site it has specifically designed to highlight these properties. The property results page will provide you a list of all of the properties that Citibank/CitiMortgage owns in that area. Select the details tab of a property and you'll get the home's current listing price, access to information about how much arrears is attached to the property (in most cases), the listing's exact address, the home details and the name of the Citibank/CitiMortgage-approved listing agent. (Pre-approved agents working in the area where the properties are located handle all Citibank distressed property sales on its behalf.)

At this stage in the process, it could be a wise move to engage a buyer’s agent who will work directly on your behalf. While you might balk at this suggestion because you feel it may add more costs to the transaction, it won’t. A buyer’s agent takes his/her commission out of the final transaction as a share of the listing agent’s overall commission. Having an agent advocating on your behalf can also speed up the process and can aid you if a particular property you may be interested isn’t showing up (immediately) on the computer listing of Citibank/CitiMortgage distressed properties. (The bank openly states on its site that many properties take some time to make it to the website and an agent will have more immediate access to a broader base of possible options for you.)

You may also want to have any distressed property you are interested in formally inspected. Nearly every distressed property is going to be sold on an as is basis. A formal inspection is going to help disclose any major problems that might be present on the property, including needed repairs or any deferred maintenance. Any offer you make for a distressed property should take into account any repairs you may need to make or any deferred maintenance that is needed. Having a buyer’s agent working for you will be invaluable in determining what that smart and proper offer should be.

A few final words of advice

For any offer on a distressed property to be binding, Citibank/CitiMortgage expects it to be made in writing. All follow up responses to a buyer’s offer are also done in this way. Patience is an important trait to have in this process. The turnaround time on a REO offer fluctuates according to the number of REO properties assigned to any specific area. You should also know that if you are engaged in a short sale process, there can be several or even multiple back-and-forth negotiations on offers before a final asking/selling prices is agreed upon and even then, some areas allow the original homeowner/borrower one last shot at saving the property before a distressed property or short sale goes through.

It is also highly advisable that you get officially pre-approved for your financing before embarking on the pursuit of a distressed property (unless you plan to pay cash for the property.) Having a formal pre-approval letter from a lender will show the sellers that you are serious, it will speed up the process, and it will give you a real sense of how much negotiating room you will have when pursuing a distressed property.

If you do your research, you could end up paying a low price for a home. If you plan to buy a distressed property, Citibank/CitiMortgage may be selling the home of your dreams. To compare the REO listings for sale by other lenders and government agencies, go to this article for a list of websites, or go to Reply! for a comprehensive list of foreclosed properties and REOs. 

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