How to Win in REO Offers

Last week I was asked to help a buyer purchase a bank owned home in Talking Rock Ranch. This is a high end gated golf community about 20 miles north of Prescott. Because many of these golf course properties were purchased at the height of the market in 2005 an 2006 as second homes, they were particularly hard hit by the declining market. Now we have about 80% of the listings made up of REO homes. One home in particular had been priced far below the rest and made it amazingly afordable, (priced about 35% of its original sale price in 2005).

At the point my client contacted me, there were already two other offers submitted to the listing agent. My goal was to get my client's offer submitted and accepted ahead of the first two. Often with REO listing agents (L.A), they will tell you exactly what the offers are so all the cards are on the table. However this listing agent was not going to make it so easy. By the time we had the offer signed and ready to be submitted, the L.A. informed us that the bank was already asking for the "highest and best" from the first two offers. This tells us that the offers were close enough together that the bank wants to separate them so they can have a clear winner. At this point I am advising, my client to ignore the listing price and look only at market value. We decide to increase the offer significantly over list price. The LA tells us that we have come in under one of the other offers and asks if this is our best. My client reconsiders and comes up with her highest and best offer which ultimately gets accepted.

However its not all about price. There are other factors that can make your offer more palatable to the banks. First and foremost the offer must be clean. By clean I mean that you should not be asking for anything beyond the property. Minimal inspection time, maximum earnest money deposit, short close of escrow time frame. And unless the seller is already offering extras like home warranty or seller concessions in the listing, you should not ask for them. My client's offer was very very clean, and she was very motivated. The fact that it was also an all cash offer with a short close also helped.

Dave Conners enjoys helping his clients find the best deals on Prescott area REO homes.