Let's take a Train Ride!......On How to buy REO properties (Part I) - Special Offer Instructions

Now that the weather is getting a little better and I decided to latch on to the Spring concept, I thought a little "outing" would be fun. A training ride.... This is part I of the REO training.  How about us going on a REO (bank- owned property) tour.  OK so its all imaginary but it promises to be informational. (might not be fun, but you might learn something!)

1. Since REO is the way the market is going or is there in some big areas, lets just take the time to really get as much information on this process as possible.  I am here to help.

Here's what you need to go on this trip:

• A REO knowledgeable agent
• the MLS
• A buyer that is price range approvedand can get bank acceptance letter * (we'll talk more about this later)

OK for now that is all we need to get started.  Lets start with the agent:  Since the market is so loaded with foreclosed homes, a simple drive down a few streets will bring you a few REOs that were not there last month or last couple of weeks for that matter.  However, that is not the "smart way" to find REOs.  So lets be smart.

Lets use the MLS.  (find out if your MLS let you do a search on key words), if yes - try REO, bank owned and I am sure you will more than a few listings to work with in the area your buyer is interested in purchasing in.

So now we have our list: Lets just check out something about each property.

OK we have the location, Size, a nice picture or a few pictures, and the price.  So now lets see what else do we need to know about these properties....?  Hey what's this - special remarks, special instructions, see attachments???? What does it mean and is it important?

Lets not skip the agent's remarks about the property (real important for this type of purchase):  *** Actually an agent should always read the listing agent's comments, but especially with bank owned properties.

• Here are some of the Comments you will probably see:
• Bank owned
• Pre-Approval or Bank Acceptance letter required with offer (from lender) - Mortgage - Broker Pre-Approval letter is not sufficient)
• As is only sale - no repairs paid for or credit to buyer
• Addendum attached must be signed and included with each offer
• Please read special instructions before you submit the offer or call agent
• No inspection period will be given - property sold as is (please inspect before you submit.
• See attached special submit offer instructions *** Always click on the attachments. Always.

Some of these notations are common but for the sake of this post, lets pay closer attention to what the agent is saying to us. Since we will be dealing with the bank demands instead of a homeowner... probably should make sure we follow the instructions and not try to throw our "bargaining weight" around.   Instead of just rushing on over to the properties, lets take the time to fully understand what these comments mean.  It is guaranteed to say us time, energy and possible rejection somewhere down the line should we find a property that our buyer is interested in.

So lets click on the Attachment portion of the listing and see what we need to do.  And we should do this for each listing because each bank may have their own "special instructions and requirements and limitations".  Some will read "Offer Instructions". Read it carefully.

As an example:

The bank will probably state that you are submitting an offer to purchase a bank owned property.  There is limited information available for disclosure for this property.  The following must be adhered to in order to process your offer.

The bank may state that they can take up to 10 days to respond.  OK that's different because the standard response time is 3 days. If they do not give a number of days, they will probably state that it may take several days to reply to your offer and expiration dates may be exceeded as per the standard contract. So that's important to know and relay to the buyer.  Patience is required.

The bank will list some minimum requirements - which may be:

• Purchaser's full name, address and telephone number
• Seller agent's name, broker address, phone (fax and email address)
• 1% Earnest Deposit made payment to Seller's Choice of Title
• The bank will probably state that they will choose the title company.  This is more the rule than not.  Some agents have a problem with this.
• Copy of Earnest Deposit check
• Closing date may not exceed _____ days
• Bank letter of acceptance (Mortgage Broker letter of pre-approval is not sufficient)
• Seller concession amount towards expenses, i.e. home warranty, title, escrow, etc.
• Property is being sold "AS IS" no repairs will be made by the bank
• Purchasing a property directly from the bank is similar to an auction purchase.  Please considering the following when preparing your offer:
• Inspection timeframe allowed (usually a max of 0-5 days for inspection contingency.  Its recommended that the purchasers complete inspections prior to submitting an offer
• The bank has not been re-negotiating the terms of the purchase contract based on the findings of the inspection report; you may be required to submit a new purchase agreement if seeking a reduction in price.

Sorry we will NOT get out today to ride the train and actually tour the properties, not until the agent understand and pay attention to the above.  Lets set something up for tomorrow to actually go out and view properties.  The agent will need to make sure their buyer knows what the price range is that they can afford and will be able to obtain a bank acceptance from the lender as this is important once they locate a property that they like.

So check out Part II on the REO process - that is up and coming.

Want to purchase a REO property?  

Need a Short Sale Specialist? 

Need information on the foreclosure process?

Give us a call today!  866-750-8282

For a FREE MARKET EVALUATION of your home Call us or visit http://www.motheranddaughterrealty.com/

Check out: Real Estate Terms/Definitions.  And take a look at Mother and Daughter Blog and D'Adrea's Mother and Daughter Blog  - for other tips for Sellers and Buyers. I work with my daughter as the Mother and Daughter Real Estate Team at Perfect Financial Solutions and we also focus in Short Sales and the Pre-Foreclosure process.  Our consultations are free.  Our aggressive marketing plan includes on-line listing advertising.  If you are thinking of selling or buying a home in Northern California's Central Valley (San Joaquin County CA - includes Stockton, Manteca, Tracy, Lathrop) plus Stanislaus County CA - includes Modesto, Salida, Riverbank) & the East Bay (Alameda County CA - includes Hayward, Fremont, Newark, Union City & Oakland) and surrounding areas give us a call.  If you would like a FREE Home Seller or Home Buyer Handbook, please call us at 866-750-8282 or email at US.

Check us out on website: http://www.motheranddaughterrealty.com