Winning Your Offer on Your REO or Foreclosure Property

Winning Your Offer on Your REO or Foreclosure Property

You will encounter multiple offers and other bidders on foreclosure properties whether you bid at a foreclosure sale auction or purchase a REO from the bank.

These types of properties are always in high demand because buyers/investors know they are getting a bargain property at bargain prices the majority of the time. There are some winning strategies to follow to increase the chances that your bid will get accepted.

Here are just a few basic strategies to follow:


REO Multiple Offers

There is a lot of competition for REO properties from other investors and first-time homebuyers looking for foreclosure deals. To increase your chances of getting your offer accepted, pay cash and keep your contract contingencies and closing date short. Don't ask the seller to pay for anything. Price matters, so offer at least full price and usually over asking depending on how many other offers have been submitted at the same time if the home is under market value and still a good deal at over the asking price. Do your homework first to make sure you are not getting caught up in a bidding war. Take into consideration any repair costs.


Auctions

When bidding at auctions, make sure you have checked the title to see if there are any liens you might have to pay off, whether or not the property is vacant because you are responsible for evicting any tenants or former owners living at the property, and that the price is within the price of recently sold comparable properties. Also consider repair costs. Have cash available to pay for the property if you are the lucky bidder whose bid is selected.


Factors to Consider

Since the bank is not in the real estate business, you know they want to get rid of the property quickly. Banks like cash offers because they know the buyer will close the transaction fast and they usually accept the highest price and best terms when there are multiple offers.

At auctions, the same theory holds true. Banks look for the highest price and cash is required. The property will be awarded to the highest bidder.

If you have never bid at a foreclosure sale auction before, you might want to take another experienced investor with you to show you the ropes. Working with a mentor when you are a new investor is a great idea.

If the auction property does not sell, the bank buys it back and it becomes a REO. If the property is really underpriced, then go for it but if you have any doubts, then wait for a better opportunity to come along. You can observe how the process works so you know what to expect the next time around.

It is not worth getting caught up in foreclosure bidding wars and over paying for a property just to win it. Many times homes that are bid at auctions get over bid in the excitement of the auction atmosphere.

Not every foreclosure may be the right deal for you and you need to recognize when to walk away. There will always be another deal waiting for you.

Better to be sure the home is the right opportunity than to make a costly mistake that you will be paying for years to come.

Matthew De Fede SFR

COLDWELL BANKER Residential Brokerage