Up until the last year REO's were not the average listing in our Northern California market. Of course, there were the occasional listing but nothing like it is today. With the number 1 REO market being less than 5 hours south of us, Redding has been hit hard with bank-owned properties and short sales alike.
After representing numerous buyers through the process, we have learned much that has become invaluable to us for future transactions that I'd like to share:
- First, ensure that before you go out with your clients looking at properties that you explain the difference between REO's, short sales and traditional listings. We have a hand out that we like to share because many clients still don't understand and they think a short sale is an REO and that all of them are foreclosures owned by bank with quick response times...NOT TRUE!
- Second, if writing on a short sale provide the listing agent an estimated settlement sheet for them to give the bank showing their proceeds based on your sales price. This can speed up the response time since the listing agent would have to wait to be asked by the bank to pull one. Also, ask the listing agent if they have done a short sale before and if they already have the short sale package from the bank. This is huge as the seller needs to complete the package and submit it (and all paperwork) with the offer so you want them to have it ready to go upon your offer being presented to seller.
- Third, if working on an REO, ensure you have your clients sign their loan documents 3 days before date that escrow is supposed to close as most REO title companies have to send the deed around after documents are signed, usually delaying escrow by a couple of days if you haven't accounted for this ahead of time.
- Fourth, be patient and inform your clients that time frames are upwards of 3 months on some short sales and that not all banks are willing to take a super lowball offer but it may be worth a chance. It seems as if banks are more willing to negotiate around the 30th day of the listing (before reductions) and not so much upon a new listing being put into the MLS.
Hopefully this helps if you are new to the business or not familiar with these types of transactions! If you are new to them don't be afraid to ask someone in your office that knows them well...it will definitely save you hassles in the long run!
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