Working in this specialized niche has brought me to the conclusion that there are many Buyer Agents out there who are either not knowledgeable about the REO process or fail to inform their buyers of the process. I think this is a key aspect to a good relationship with your buyers and that as an Agent, you owe them the full picture of what they are embarking on when buying an REO property. Some key areas that really are necessary to convey are:

READ THE BANK ADDENDUM - The bank addendum is always a part of an REO transaction. Advise your buyer to read through the whole thing (no matter how many pages it may be).  There are fees, disclosures, what the seller will and will not do, not to mention a very strict timeline.

AS-IS, Where-Is - IT IS WHAT IT IS FOLKS!! In the Bank Addendum there are many items that refer to this part of an REO. Very rarely will a bank do any sort of repairs unless they are specifically noted in addendum. Some of the items mentioned in the bank addendum are termite treatment, HVAC or a specific dollar amount that will be allotted to buyers for repairs. Also note that if the buyer does go out on a limb and request repairs the process to get an answer is not speedy at all. The LA must get at least 3 bids for each item (or group of items) and then submit to seller for approval. That alone takes time and to expect an overnight answer is unrealistic. Your buyer needs to know this and when it states "AS-IS" that is exactly what it means

Closing Date - This one is an issue because many Agents do not inform their buyers or the lender of what exactly the closing date means. When a bank addendum states that a property must close on or before "XX-XX-XXXX" it means that the transaction must be completely closed. NOT just buyer signed but buyer signed, seller signed, funded and recorded. This is what the closing date means. Once a buyer signs, it takes a MINIMUM of 48 hours to receive the seller signed docs back and for the loan to fund. Understand that when your buyer goes in to sign their loan package for a purchase of an REO property, they DO NOT get their keys that day! Please make sure that your buyers understand that because it can be awfully disappointing and the buyer will blame their agent if they are not informed of this in the beginning.

Per Diems and Extensions - Refer to paragraph one J Read the addendum. There is always a paragraph in an REO Bank addendum that refers to "Time is of the Essence" and breaks down the per diem your buyer will be charged for every day they exceed the agreed upon closing date. Extensions can eliminate this but the seller must agree to it and they usually will not extend more than 10 day increments and forget about extending from one month into another without the per diem.

The bottom line is this: It is not fair to your buyer if you do not inform them of the REO process ahead of time and give them a heads up of what to expect and what NOT to expect. If you inform your buyers and yourself, there are many great REO properties out there and your buyer can indeed have their dream home. REO is a great way to go when looking to get the best bang for your buck, just know the road to a successful REO closing and how to navigate it before you make the trip.