REOs are known best for being an opportunity to purchase a property that will have equity in it, that may require some repairs on your part but will in the end pay off.
So When buying a REO you may encounter the following:
Long time to get an accepted offer: Bank may take a long time to tell you yes or no. They advise you right off that they will take longer than the 3 days that our purchase agreement state (at least in California). They may take your offer in order of submit or they may pick and chose from the best offer. You will probably never know what they are looking for -- often times the agent does not know and believe me the agent will be just as frustrated as you are --waiting for a decision.
You will need to learn how to WAIT: You need to know that you make be in a pool of multiple offers. That if you thought you could low ball offer, you will probably be surprised to see that the bank is not going to jump at the first offer or jump just because it is a cash deal. Sure buying a home is serious, but when you are buying a REO you will have to learn how to wait on the bank, you will have to know the process so that you don't get frustrated and not be able to realize that you are getting a good deal with the purchase.
Get your inspections, do your walk thrus, toss it around and think about it twice before you make the offer. That's before, not after: Once the decision is made and you sign the Bank's counter and addendums you in there! And word to wise.... make sure you understand exactly what is on the bank's counter/addendum because going back to the bank to get something changed is next to impossible. They expect to move forward as per their contract.
You will probably be countered or you just might be rejected. Learn to not give up. Don't be surprised that they countered back and took all the concessions that you asked for off. The banks usually do not have any plans on making the transaction easy for you the buyer or giving in or really giving you anything. They are looking at the bottom line of what they want and when.
Don't be so serious that you miss the point of how and when to buy a REO property. Consult an agent. So be careful, be serious and be alert when you make your offer for a REO property. Although the transaction is a little different from what we are familiar with, it does work and there are some real good deals out there.
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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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Mother and Daughter Team-Residental: Buyers, 1st Time Buyers, Sellers, New, Resale, Short Sales, Foreclosures,REOs, Relocation. CALL @ 866-750-8282 / TEXT 209-346-9806 www.motheranddaughterrealty.com
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Rosemary, Amen! I always tell my buyers to hang on for the ride when purchasing an REO, for sure!
Elizabeth ~ well said. Hang on because once it close -- you will probably have gained equity which is priceless.
Rosemary- very good tips. You can not have enough tips or patience on these short sale deals.
Rosemary, we are currently working on an reo for ourselves. Its hard to be patient because you wonder what's going on and is someone else getting the property out from under you!
Endea ~ actually this was about REOs but the same pretty much goes for short sales.
Betty ~ I totally agree and that is why I am trying to let buyers know it is not an easy process to understand or deal with. But the values are usually worth it.
Excellent post. There are similar characteristics across the board when buying REOs no matter what state you're in.
Matthew ~ Thank you and I am glad it is useful information.
Rosemary: REOs are definitely not for the faint of heart. And I'm finding in my market that they aren't necessarily going below market value. There isn't a whole lot of instant equity, though many people do think so. Banks don't let houses go too far below market value. And you have to remember, those REOs that do sell below market, BECOME market value as comps for the next guy to sell. It's a tough ride.
Chris ~ you hit it on the head. Then to top it all is that the asset management companies will pull a listing after you have put all your efforts into it. Then the next agent will come behind you and get the sale - partly due to the seasoned time on the market!!!! Tough.
Great post. I have bookmarked it . Buyers do not realize that it requires patience .
Gita ~ The way these REOs are popping up I think that it will catch on that it does require patience.