REO properties, A good deal or not, a REO agents take

Andrew there are some good tips here.  It is harder to get an approved offer on REO because of the possible damage to the hosue and this is especially true if the buyer is financing and have to meet the lender's demands before close.  The repairs neeed is an issue that is hard to address.

Andrew there are some good tips here.  It is harder to get an approved offer on REO because of the possible damage to the hosue and this is especially true if the buyer is financing and have to meet the lender's demands before close.  The repairs neeed is an issue that is hard to address.

Great blog and tips some people just dont seem to realize these things. However I have come across a few realtors who get very insulted by low offers but is more in line with the market then where their asking price is. Why do realtors get insulted, do your job present the offer in like you said a favorable light and do your job, attitude needs to be checked in this business.

Great insights!  I like REO transactions as they're allowing a lot of folks to get maximum bang for their buck.  Anything I know as to ensure the bank accepting my offer the first time is fine by me.

I too appreciate your insight.  For the sake of all agents and future buyers, please fog all properties prior to listing them.  There's nothing worst than a flea ridden bank repo.

Andrew- thank you for the market tip about purchasing bank owned properties. Have a great New Year!

Great advice so many buyers think that us REO guys are normal realtors.  We get paid to identfy the bad for the bank.  Pointing it out again during the offer only makes me aware that the buyer is smart.

This is excellent information, even for an ol' gal like me.  'Haven't had any occasion to sell REO properties in several years, and this will serve as a good reminder of "how to".  Congratulaations on your gold star - you deserve it, for providing us such helpful content!  Thank you.

Great list - I am a REO agent as well and it is great business - and they are generally very good opportunities for buyes

I have one in contract right now...I am starting to do more of them. It should be closing in Jan...nothing wrong with them...this one is a good deal in the aea.

An excellent post.  I think what is especially frustrating for buyers is the wait and see from the banks. They have their own rules to follow and many times, the buyers just don't understand or have the luxury of time to wait for an answer.  Wishing you a fabulous 2008 selling season.

Good info. Some agents are so hard to work with when dealing with these properties.

Thanks for the tips.  I've not done these yet but I'm sure I'll see some in the future.

I appreciate all the advice I can get. I am looking into going into listing REO's and am researching what I can through the AR blogs and comments. I cna learn so much more here. I have taken classes, but you all and your hands on experience is so much more enlightening.

thanks

sue from Maine

great tips. REO and short sales are becoming much more common in our area, and I appreciate the viewpoint from the listing agent side

Andrew, 

thanks for the post,  I just closed on my first REO ( co-broke)  My buyer got the home not because he had the highest offer but because I was the only Realtor that followed the banks instructions in presenting the offer. How do you go about getting these bank owned listings?

Thanks Andrew,

I wish I had read your blog before making an offer on an REO for my client.  We knew the process would be slow and we submitted the offer with all the requirements.  The eight page bank counter is what turned my buyers off.  They didn't like the fact that they could be penalized for not performing on time, but the bank basically had no accountability. Luckily they found a short sale for a good price.  After that first offer on REO's I spent hours on the Internet researching the process.  Now that i discovered AR, I know where to go first.

Great Post with a lot of great tips!

Each point, when addressed, will lead to a successful closing transaction. I'm still amazed with number failing to follow the instructions, especially when it is clearly listed under the broker remarks on the MLS. The banks are very picky and will throw out an offer when instructions are not followed.

Carolyn Nelson, Carolyn@OnlineREPA.com | www.OnlineREPA.com | 877-717-4491

Every REO property is different.  Some are for the hardy fixer upper types and others are move in ready.  Offers should reflect market and condition.  Banks do deal just sloooooowwwwwllly!

I'm looking to do BPO's & REO's. Got accepted by Clear Capitol which was a tip from another here on ActiveRain for BPO's so we'll see what happens.  How do you get into doing REO's from banks? I'd be interested in hearing what you do. Thanks!

Thank you for speaking out. I have been working REO's in the Bay Area for a while, and I have definitely noticed some of the same issues that you are talking about! Great insights!  

I am in process with an REO property that has been a bit of a challange. Appraiser called for a new roof and the lender wouldn't put it on, buyer agreed to but the contract addendum the owning company used has a clause they can cancel the contract at any time. If buyer was to take on the roof we wanted that clause removed as some assurance the buyer would get the property, they wouldn't do it and the day before closing agreed to put a new roof on and extend the contract..

Good tips.  But, I wish that the banks that have REO properties around here would get real about pricing.  I have yet to see one that wasn't disgustingly over-priced.  One of the properties a client offered on ended up sitting on the market for another year, and then selling for $50k below his offer... and after a year, that was too much.  Too many of the REOs in this market are priced on par with occupied homes that need much less work.  Combine that with the hoops, and it isn't a wonder that the properties aren't moving.  

Andrew - Thanks for the great tips on a growing part of the industry.

Lane - I have been hearing similar complaints.  I don't know if it's location, certain banks, or just the bank representatives assigned to the home.  Any thoughts?

That was a good start...I am working on a letter that I can add to the MLS that Agent Chad Baird shared with me. It is very similar to what you started. It lets the buyers and agent know what to expect in terms of a time frame. my favorite is the offer that comes in from someone who either read a book, who had a friend that knew a guy, that talked to a friend whose brother-in-laws cousins sister bought an reo for ten cents on the dollar.

I will present all offers on the REO, even those that the incompetant buyers agent only brought part of what I needed.

I am somewhat underwhelmed with you advice. There are many sticky area's that you simple gloss over. The first one is:

1. Why the representative for the buyer cannot present the offer, but thru the listing agent.I have seen way to many offers not get presented on an REO because the listing agent is in hopes of selling the listing and getting both sides, yes I know most agents think if I say I will do my best that we will all go I can believe that. Unfortunately this REO business is  one sided. Many of the agents handling these are trying to get both ends because they cut their commissions.
2. Comps in the area, unfortunately the auction price is a what the public will pay and it is counted as a comp. So, what has been told to the lender many times is incorrect by the listing agent. Ask an appraiser about recent comp's in the area, no matter how you slice it the recent comp has a bearing, be it foreclosure, short-sale or probate.
3. Presentation of the home, I have worked REO's and most of the time, the agent is responsible for the clean up, the repairs and the eviction of the present tenants, and then they can get either  reimbursed from the lender and that can be when the home sells or they put in a expense chit and wait for the reimbursement which can take weeks. Too many times the home is given the minimum of needed attention because of the cost to the agent to get  it in shape. Even if it means it will sell faster.
4. I wish this posting explained how this person gets the REO and not what he has to do once he has the REO, I do not think asking for sympathy because you had to get up and go to a listing at 1 in the AM, is really doing anything special.
5. Pricing is still an issue and that is how many agents get these listings is because they do not honestly inform the seller of what the present market is doing, as we all know comps that you have that could have closed on Monday are already 2-6 Months old.

To all the agents that want to get involved with REO's I would suggest getting the Lane Guide, you will get all the REO dept's plus the phone numbers of who you can contact. This info can be gotten on line. if you have a lender that is unique they will look it up for you and find the location of the REO and the telephone #. Then have patience. Also if you see a REO that is not being taken care of report it to the broker, there is nothing more unsightly then an REO that has been abandoned and keep records of this because many time these REO's lenders become disgrunted with the agent and will start shopping for a new agent.

Lorraine

Thanks for the information!  Very useful. 

"I am somewhat underwhelmed with you advice"

 I did not mean for my comments to be all inclusive or gloss over anything. it was meant as a a viewpoint with some advice.

on your points,

1 all offers go through the listing agent in all real estate whether bank owned or not. if they do not present they breach their fiduciary to the client, you make very general accusations in this point which in my opinion is too broad reaching and wrong.

2. yes but that home is no longer available,

3. the bank determined the level of clean out and what is a reimbursable expense, currently i have over $40,000 in expenses waiting for repayment. I do what im told to do and what the owner of the property authorizes me to do.

4. this is a blog hoping to pass on some information, i did not ask for or expect any sympathy, just to pass on information.

I am sorry if you thought that you need to attack what i said, i just wanted to share some things with the group as a whole.

Lorainne makes some good points.  I think there are pitfalls for those who are not sophisticated.  I am glad you started this dialogue -- I will check back later.  Very interesting.

I would also like information on getting REO's.  I seem to get a lot of BPO's, which as a newer agent I consider to be paid training, but I sure would like to make the jump to REOs.  

Any advice out there?  (I'll be looking into the Lane Guide.) 

Okay, I'm back.  I just looked up the Lane Guide Lender Directory.  What is the best subscription for trying to capture REO business?  Does anyone subscribe to the Lane Guide and has it been worth pursuing the REO contacts?  Is this the best way to go about getting REO business or does anyone know of other ways to get it?

thank you in advance for your advice. 

Bob, I think it might be a function of area.  A lot of lenders aren't based here, and don't know the market.  Some of the prices I see don't really look right for the area, and in the few cases where I've talked to someone from the lender's office, I have gotten a "we, around here..." response.  Talk about dumb...  

Of course, some of it is agents that won't stand up for the actual value when the loans are out of this world.  I have heard "but the lender owes..." more times than I can count.  Of course, what is the first thing we all tell sellers?  I doesn't matter what you owe, only what the market will bear.  

Good points on REO's. Clients have to be prepared for what will/may happen. Not all agents are willing to do that much work either. I have yet to see a real bargain on any REO in my area, but we don't have many. This is a timely topic. Thanks.

Paying for the Lane Guide is basically a waste of money.  Okay it will get the newbie's the names and addresses of only those asset manager who wish to be a part of the directory.  it will also get you the correct addresses but you can get that via yourself for free.  I used to trash this stuff all of the time or give just the company general information and not my name.  Two commercial asset managers i know very well, one for Citi the other for Banco Popular said that they never give out their names as their phone rings plenty and they do not need anymore broker or investors calls. 

There are better ways to spend your money! 

It is so frustrating to work with buyers and convince them of what you just said!!!  What are your area stats like?  I just did my monthly REO market report (hop over to my blog to check it out, numbers can be exciting!)  I think we may swing to close to a seller's market here in LV soon! 

Post some stats.  I LOVE STATS!!! 

Interesting post. I had a buyer who is interested in purchasing a REO property and was told that our offer that was less than the listing price was too low. However, this house had water damage (roof leak) and we smelled gas in the back. It looked like the walls were painted over the water damage because the walls were peeling. So it is interesting to me to know how agents think and weigh the offers that they receive. Thank you for some insight.

Thes are good points.  I have not listed or sold any REO's but this past month have started doing BPO's for such properties.  It is interesting how these homes are left.  When I see them I'm sure they are at their worst..I give such a price that reflects the condition as I see it that day, as I'm sure you do.  It is funny how many people will try to low ball a property when it is obvious that the listing agent knows the condition of it..  Good luck.

Thanks for the post. It puts some light on how to handle REO purchases that many many agents are either not aware of or just try to play games with the banks. I for one as an REO listing agent will always return calls and will always present every offer. I do not play games as some suggest. Thank you for a great post.

I just closed on a REO property (a Fannie Mae). No problems. Presented the offer, they came back with counter, we accepeted and closed in 30 days.

It even went through as an FHA loan !

Don't skip a house just because it is a bank owned listing. The buyer can get a great deal.

Thanks for all the tips.

Belinda Sanchez, Realtor

www.belindasanchezhomes.com

Good tips. Dealing with REO's is definetly a new experience for many of us. I just started an REO website with some of my colleagues for Bank Owned Properties in Big Bear and there is so much to learn. Thank you for sharing.

Izzy Barden, Realtor

www.bigbearreo.com

izzy@bigbeargallery.com

Good advice. I think the perception that some REO brokers are looking to hoard their inventory is out there, but the most important aspect to the business is in the relationships that we create with other members in the industry. Especially in this market, the more info we can provide the better opportunity we have to get our offers accepted. I'd be more interested in knowing more about the foresclosures in your market and look forward to more of your posts.

Thanks for sharing from your store of experience.  Have a great New Year!

Wishing You HAPPY HOLIDAYS and Best Wishes for A GREAT YEAR 2008.

Tommy   New York Certified Home Inspector Long Island NY Nassau/Suffolk/Queens Home Inspections

Very good points to remember. I just had buyers offer 70K on a 110K REO and thought they would get it. I tried to tell them the price was already reduced because of the condition. I did run comps and showed them. After playing games we did get the home for 100K. Still was a very good buy.

Even in the slower market people are not giving away homes and buyers need to remember that.

Thanks