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:
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.
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.