Lots of Carlsbad buyers are seeking REO (real estate owned; bank owned; foreclosed) properties in our area. True all over I suppose. More so in some areas than others
There are some things I like to know when starting to work with REO buyers since they have some hoops to jump through, and I am learning more all the time. Part of this comes from past experiences as well as my own thinking, but also from a recent CRS 111 class and working on my SFR certification.
I decided it made sense to formalize my questions as a starting point for a good discussion with Carlsbad buyers. But I'd be interested in what others have to say. This is a partial list but a good beginning.
WHY DO YOU WANT TO BUY AN REO? WHAT IS THE MOTIVATION?
Getting at motivation is important in any real estate purchase, and understanding what is truly driving someone in a certain direction is essential. It can be a good indicator of seriousness, or lack of. And in the case of REOs it may, in some areas at least, be more an issue of budget and what's available, versus having a keen desire to snare one of these properties.
CAN YOU PROVIDE PROOF OF FUNDS?
This is almost always requested with an offer - certainly so for cash buyers - but it makes sense. Buyers need to be able to provide this (I do upfront even if not asked). If they can't or don't want to, well, that's a big red flag. No POF, no offer.
ARE YOU FINANCIALLY PREPARED AND ABLE TO GET TO CLOSING?
This is NOT just about being pre-approved (that's a given before getting started). It also has to do with additional expenses the Carlsbad buyer might need to pay at closing because the REO lender will not (e.g., termite repairs, escrow fee, title insurance). What if you need or want to lock in your loan, or relock it? What about the costs of repairs you will need to do? How about those missing appliances, fixtures and more you might need to buy?
ARE YOU WILLING TO BUY "AS IS?"
Knowing how squeamish the Carlsbad buyer is about a property that may need cosmetics, repairs or more is kinda important. Many REOs are not exactly in move-in condition, and it is unlikely the seller will do any repairs if asked. The inspection (which in my book is mandatory) may be more informational and educational for the buyer rather than to develop a repairs list. If the buyer wants only a turn-key home, we have a major challenge ahead because of supply. It may simply not be realistic.
ARE YOU FLEXIBLE WITH REGARD TO CLOSING TIME FRAME AND POSSESSION?
Delays are not uncommon, and you can, of course, never be 100% sure an REO closing will happen the day it is supposed to. If you have a drop dead date (e.g., end of a rental) and no alternative plan or option, this could be a problem. And delays mean other issues - changes in moving trucks, utilities, insurance and more.
Is this all to ask? Heck no.
- How about understanding how patient the buyer is?
- Or if they are prepared to make an offer the day the right REO comes on the market?
- Are they willing to make an offer based on comparables and not take the "I want a home for 75 cents on the dollar."
You get the idea.
Any great questions YOU like to ask?
******************************** If I can provide more information about Carlsbad real estate and surrounding areas, or the housing market in general, or otherwise assist you in your homes search, please contact me by phone or text at (760) 840-1360 or email me at JDowler@remax.net. All content copyright © 2010 Jeff Dowler Carlsbad Homes and Real Estate Tidbits
If I can provide more information about Carlsbad real estate and surrounding areas, or the housing market in general, or otherwise assist you in your homes search, please contact me by phone or text at (760) 840-1360 or email me at JDowler@remax.net.
All content copyright © 2010 Jeff Dowler Carlsbad Homes and Real Estate Tidbits