Making a REO/bank owned offer? - - here are some tips!

Found a REO / Bank Owned property that you want to make an offer on but not sure how to make the offer? 

What you want: So you want everything fixed, termite Section 1, bank to pay all the escrow fees and on top of this pay a 6% closing cost credit towards the sale!! And to top this off you really don't plan on paying anywhere near the listing price for the property because it is a bank owned property and everybody knows these are all deals waiting to be closed - right? 

Answer: In a word NO!  Despite what you have heard on TV, what you have heard from someone trying to convince you that REOs are the way to go.... they don't work that easy.

Banks are simply not bitting! or are they?

Here are a few tips that I'd like to share that I think will help your offer be accepted.

Understand that your offer will probably be 1 of a mulitple of offers (so don't think just because you are paying with cash that you can low ball the offer and ask for the world)! Your offer will be submitted to the agent, the agent will submit to the Asset Manager and this is where the negotiating begins.  It may take a few more days than what the standard CA purchase agreement states for a response to your offer will get back to you.  So sit tight and be patience. 

Understand that he bank is not looking to give you the deal of the year with this purchase.  They have spent a lot of leg work getting BPOs and having agents check the market conditions and comparables to come up with the list price.  Sure they know the list price is probably just slight higher than what the agent would like to see it list for and surely they know that the listing is probably at least $10,000 more than what it is worth if not more.... but this is the price that the Asset Manager has decided is the price that they are going to take -- so is it smart for you (if you really want the property) to offer a "low ball" offer and ask for repairs, credits and expect your offer to be accepted?  Probably not smart.

Here are some things that will probably not changed about how REOs are sold:

1. AS IS (means little to no repairs will be done to the house by the bank)
2. Inspection time allowed: will probably be 7 or less days (this is why it is wise to do your inspections prior to making an offer)
3. Closing time:  30 days if financed and 20-30 days if cash (banks don't like to hold on in escrow for over 30 days - usually), but this does not mean you cannot ask for 45 days, but just know it might be countered.  Depending on when COE will fall during that month.
4. Banks expect FULL offers (they will usually pay the escrow and owner title insurance and Transfer fees) - other requests may be countered
5. Banks do not like to give credit back (at least not over 3%); unless you offer full price and then account for the credit back.  In other words do not offer less and then ask for 6% credit back!
6. Banks do not like contingencies.  Just the word seems to invite a counter!
7. Banks will always use their form to have you accept the offer all over again - it is called "Counter/Addendum / Contract" and it is what escrow will follow to close the deal.  This document is very important and just may state different from the purchase agreement - when you sign this document it superceeds the Purchase Agreement.

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Check out: Real Estate Terms/Definitions.  And take a look at Mother and Daughter Blog and D'Adrea's Mother and Daughter Blog  - for other tips for Sellers and Buyers. I work with my daughter as the Mother and Daughter Real Estate Team at Family Realty Group and we also focus in Short Sales and the Pre-Foreclosure process.  Our consultations are free.  Our aggressive marketing plan includes on-line listing advertising.  If you are thinking of selling or buying a home in Northern California's Central Valley (San Joaquin County CA - includes Stockton, Manteca, Tracy, Lathrop) plus Stanislaus County CA - includes Modesto, Salida, Riverbank) & the East Bay (Alameda County CA - includes Hayward, Fremont, Newark, Union City & Oakland) and surrounding areas give us a call.  If you would like a FREE Home Seller or Home Buyer Handbook, please call us at 866-750-8282 or email at US.

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 the Mother and Daughter Realty Team