MAKING AN OFFER ON A REO PROPERTY

There are as many different ways to make an off on a REO property as there are fish in the sea. Each bank or lending institution has their own unique system for selling. Most banks require that buyers use a specific purchase agreement and/or addendums. Some require that a photo copy of the earnest money deposit check be included with the offer. Others are more flexible and will allow a standard purchase agreement. The variables are endless. Brokers with experience in REO will be aware of the ins and outs and will guide buyers through the process, saving time and frustration. It is important however that, as a buyer, you don’t allow the process to overwhelm you and lose sight of the larger goal – purchasing a great property at a great price. Here are four things to keep in mind before you make the offer.

· Inspection – As with any real estate purchase it is important to have the property inspected. Since banks are selling these properties ‘AS-IS/WHERE-IS’ it’s even more important. Most real estate professionals will recommend that the inspection be done by a qualified inspector and/or contractor. If there are significant problems with the condition of the property this needs to be addressed in the offer and can be used to negotiate a lower price or more favorable terms for the buyer.
· Title Search – Since the property has gone through the foreclosure process, it is important to review the title work. Have a qualified title company review the title to ensure that there will be no delays with bank delivering clear title. Also keep in mind that the previous owner was under financial distress and other liens may have been placed against the property. Again, whenever possible, try to have this done before making the offer because it will affect the value of the property.
· Negotiate – Be prepared to negotiate to get the best deal possible. Having done your homework and being armed with an inspection, list of needed repairs, title work, current market condition and comparables, will enable buyers to make a stronger case for a lower price or more favorable terms from the bank.
· Financing – Have all your financial documents in order before making the offer. Know where your weaknesses are and have the appropriate documentation available. This will give you an edge over others and impress upon the bank that both the buyer and their offer are serious.