Buying REOs/Foreclosures
6. Earnest money. Make sure to write your earnest money check for at least what is requested in the MLS. Ensure you have a current (not stale-dated) check if you have been writing a lot of offers and in the REO game for a while.
7. Buyer Pre-Approved for Financing. Pre-Approval (not pre-qualification) is a must and a proof of funds letter can also strengthen your offer.
8. Seller/Bank addendum. REO Properties are sold as-is, no warranties or guarantees. You may be able to get the seller to pay for a home warranty – it depends on all other concessions, costs and net to the bank. We are finding many banks will not complete disclosures required by Nevada statutes: Seller’s Real Property Disclosure for example. Your real estate agent will carefully review all of this with you and other language in the bank’s addendum to the purchase agreement.
9. Time frames. Allow a minimum of 1 to 2 weeks to hear back from the listing agent regarding a response from the bank. If the bank accepts your offer, expect that you may only receive a verbal or email counter and/or acceptance subject to the buyer executing the bank’s addendum and accepting any other terms. Once you have approval, open up the escrow and get the buyer going on their due diligence. Also be prepared for a closing time frame of 45-60 days or more depending on whether or not there are any issues to deal with like liens, judgments, or other clouds on title.
10. Communication. Saving the best for last! Here is where your patience, tenacity, positive attitude, communication skills, and your knowledge of the REO process will come into play. Communication, or rather the lack there of, is the biggest complaint and issue of everyone diving into the REO market. The bottom line… in the infamous words of Forrest Gump – "Life (REO) is like a box of chocolates, you never know what you are going to get." Each REO experience has the potential of being anywhere from a dream to a nightmare and anywhere in between. We can all make the experience more of a dream by the way we handle ourselves personally and professionally. Set realistic expectations – and focus on what you want, not on what you don’t want.
10 Tips to Help Get Your Offer Accepted and Closed!
Avoid the inevitable frustration and stress so many real estate agents and buyers are currently experiencing by educating yourself about the REO (Real Estate Owned) buying process!
Here are 10 REO Tips to help you get your offers accepted and closed:
Avoid the inevitable frustration and stress so many real estate agents and buyers are currently experiencing by educating yourself about the REO (Real Estate Owned) buying process!
Here are 10 REO Tips to help you get your offers accepted and closed:
1. Choose an Agent Who Knows the Market – who will do a thorough comparative market analysis on the subject property prior to writing the offer. Look at the last 2-3 months solds as well as the current pending sales. Many banks are using a tactic that results in a lot of activity and multiple offers. They get two appraisal values (market and liquidation). Then they have the REO listing agent list the property at the lower appraised value which attracts multiple offers and ultimately drives the final sales price up and sometimes over the market value.
2. Ensure Your Agent Verifies Availability and Multiple offers. Obviously it is important to determine whether or not the property is still available or if there are multiple offers before writing the offer. As the buyer, you can decide if you want to compete for the sale.
2. Ensure Your Agent Verifies Availability and Multiple offers. Obviously it is important to determine whether or not the property is still available or if there are multiple offers before writing the offer. As the buyer, you can decide if you want to compete for the sale.
3. The actual offer package. Legibly write the offer– or better yet, use typed or online forms. Ensure your offer is complete and spells out in clear, concise language the terms and closing costs. Consider scanning and emailing your offer vs. faxing it for the better readability factor.
4. Seller concessions and closing costs. We encourage you to write your best offer first. It really is all about the final net to the bank. If you are requesting closing costs, be aware that to compete with multiple offers you may need to write an at list price or above offer. Some banks are only willing to pay certain closing costs and are countering with the buyer to pay for what would normally be considered customary seller costs – In Nevada - transfer tax, CIC fees, title insurance, for example.
5. Inspections and repair costs. Write the offer with a reasonable due diligence period (5-7 days but no more than 10 days). The bank may limit or counter repair costs. We recommend including this clause or something to the same effect: "Seller to make, at their expense, any lender-required repairs as a result of the inspection or appraisal."
6. Earnest money. Make sure to write your earnest money check for at least what is requested in the MLS. Ensure you have a current (not stale-dated) check if you have been writing a lot of offers and in the REO game for a while.
7. Buyer Pre-Approved for Financing. Pre-Approval (not pre-qualification) is a must and a proof of funds letter can also strengthen your offer.
8. Seller/Bank addendum. REO Properties are sold as-is, no warranties or guarantees. You may be able to get the seller to pay for a home warranty – it depends on all other concessions, costs and net to the bank. We are finding many banks will not complete disclosures required by Nevada statutes: Seller’s Real Property Disclosure for example. Your real estate agent will carefully review all of this with you and other language in the bank’s addendum to the purchase agreement.
9. Time frames. Allow a minimum of 1 to 2 weeks to hear back from the listing agent regarding a response from the bank. If the bank accepts your offer, expect that you may only receive a verbal or email counter and/or acceptance subject to the buyer executing the bank’s addendum and accepting any other terms. Once you have approval, open up the escrow and get the buyer going on their due diligence. Also be prepared for a closing time frame of 45-60 days or more depending on whether or not there are any issues to deal with like liens, judgments, or other clouds on title.
10. Communication. Saving the best for last! Here is where your patience, tenacity, positive attitude, communication skills, and your knowledge of the REO process will come into play. Communication, or rather the lack there of, is the biggest complaint and issue of everyone diving into the REO market. The bottom line… in the infamous words of Forrest Gump – "Life (REO) is like a box of chocolates, you never know what you are going to get." Each REO experience has the potential of being anywhere from a dream to a nightmare and anywhere in between. We can all make the experience more of a dream by the way we handle ourselves personally and professionally. Set realistic expectations – and focus on what you want, not on what you don’t want.
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