Buying a bank owned (REO) property is a much different process than a traditional listing and it is imperative that your Realtor know the difference. If your Realtor is not aware of the differences, they could not only cause you to lose the property, but also cost you money in the process. Let me explain.

Banks hold all the cards in a bank owned transaction. They don't have disclosure requirements and set all the rules. They usually make the buyer sign an addendum that basically takes away most of the buyers protections and puts the ball squarely in the banks court. They set out a timeline you, as a buyer, have to meet or face the consequences. While they don't have to deliver anything until they feel like it.

For instance, I have a bank owned property in escrow right now that I got approval on almost a month ago. Guess what? The bank didn't open escrow until three weeks into the 30 day time period. We didn't get a copy of the signed contract or bank addendum until three weeks into the deal. Of course, the bank addendum we signed at the beginning of the transaction had us agree to pay a $100.00 per day per Diem for every day we went over the 30 days agreed upon in the contract. Then they did nothing on time to make it possible for us to make the deadline.

This is where my experience came into play. I have had this happen to me numerous times on bank owned purchases and I have learned that my buyer just needs to forget about the bank and make sure he does everything he needs to do to stay on track. As long as we can show the delay is not of our making, we can get out of paying the per Diem. I made sure our inspections were all done within 10 days and I made sure the listing agent had the termite inspection done also. Since my buyer is paying cash, the appraisal was not an issue. On a property where the buyer is getting a loan, you need to be on the phone with the lender every step of the way to get the appraisal done before the contingency period is up. You don't want anything going wrong at the last minute if you can help it.

You can't always get everything to go the way you would like, but if you do everything you can do, things tend to turn out OK. I always have to remind my clients that most banks don't really have any idea of what is going on at any given time. They seem to just flounder around in the hopes something will eventually happen. In the last couple of years I have seen numerous instances of banks doing things that make absolutely no sense. It is actually kind of rare to have a bank owned transaction that goes perfectly smoothly. If you hire a good, knowledgeable Realtor and do everything you need to do on time, you will come out ahead in the end.

Originally Posted At www.bigbearilluminated.com