Has anyone here delt with bank REO properties? Are there any difficulties with purchasing them?
Most banks use Real Estate Agents to list their REO’s now.
Getting the property in the MLS (which is our Real Estate Listings in this city) is the fastest way for them to get them sold.
Banks are not in the business of collecting property they want to lend money to people to buy property. So your strategy might be to find a listing agent in your area that deals with mostly bank owned property.
In our area we know when we see certain agents that it is most likley a REO just because of who listed it. Those agents don’t have to go look for clients to list for because they already have a relationship with the bank.
Since I’m an Real Estate Agent, I have access to all REO properties in our MLS. They are easy pickins for me to find (I set myself up to be emailed as soon as one hits the market).
However, since I’m an agent, I mainly work with other buyers and sellers of regular retail properties. I’ve never delt with REO properties…which I’m thinking of investing in myself.
There’s one property in particular with a price of $8,000 that has a county assesment value of $43,700. I didn’t do any comparables or even drive by the property yet but I’m sure it would be close to or even over that amount. I may look at it tomorrow inside and out to see if it needs upgrades or work done.
Anyway, I know what goes into the buying and selling regular properties. But what about REO properties? Anything to look out for during the transactions? Are banks willing to negotiate their prices?
Bank REOs are purchased just like regular MLS houses with a couple of exceptions. REOs almost always require an earnest money deposit - typically $500 or $1,000 (sometimes more). You can negotiate price on REOs but can usually not put in contingincies or weasel clauses. Also, REOs usually have a penalty clause in them which costs the buyer $50-$100 per day if the buyer doesn’t close on time. Finally, banks are much more difficult to work with than individual sellers. Nothing they say can be trusted (only believe what you see in writing). GET TITLE INSURANCE for all REOs!!! Banks pay absolutely no attention to the deadline for acceptance that you put in your offer and will shop your offer as long as they can trying to get a better price.
In short, it is VERY frustrating to deal with REOs but the rewards can be worth it. You’re getting paid for the frustration!!!
Very well put propertymanager They are a pain! On the other hand you can get great deals!
Don’t forget that some banks can be slower than the government on gettig back to you on anything. Also, they will thrown in steaky clauses into the addenda, so be careful and know that you can counter the bank. Buyers often think they have to accept anything the bank says and it’s not true. You can negotiate just like a regular purchase and if they ask for too much, let it go.
One last thing… many banks give you an option period, but don’t collect an option fee.