Does anyone have any advice for a newbie with dealing with REO’s? is it better to use a realtor or deal with them yourself?
I use an investment grade real estate agent. I do that because he deals with the banks all the time…they know him. I don’t pay the commission any why the bank does. I don’t use the pretty agent in the Ann Taylor suit, I use the gruff guy that has a key map in his back pocket and knows every dent in the pavement. He won’t be able to tell you the difference between mauve and pink, but he can tell you if a house can make money or not.
Thanks for the information, How would I find an investment grade real estate agent? are they different from a standard real estate agent?
You want to find a realtor that specializes in investors. With bank owned properties, you need to at least go through the agent the bank is using, whether you use one as a buyer or not is up to you - but I think the bank takes your offer more seriously if you do. Plus, if you are new, a bank will certainly take you for a ride if you aren’t careful. Reading the fine print in the bank contracts is crucial - you often are asked to pay for things that sellers normally pay for.
You can call some real estate offices to find one who works with investors, or go to a local rei club meeting and ask there.
In my experience, dealing with REO agents is frustrating and almost worthless. Most successful REO brokers concentrate on listings not dealing with buyers. They won’t return your call, they also will persuade you from lowballing. I’m in the Houston market and some of the REO agents have so much business they completely ignore buyers and let the properties sell themselves through the MLS and other agents. This might be different in smaller markets.
I would suggest dealing with an agent who is experienced in foreclosures, preferably with investors. Most agents dont like dealing with foreclosures because the process is impersonal. Some banks also offer 2%, 2.5%, or 2.75% instead of the customary 3%. There are still banks that offer 3%, but most realtors only want 3%. So they will not present these lower commission homes to you.
My agent works mostly with REOs and investors. I’ve worked a lot with foreclosures, so I know the process well. You will most likely have to pay for your survey and sometimes title policy. Some banks also dont turn on utilities for inspections. Banks usually give an inspection period of 5-7 days. They also take cash offers or hard money loans more seriously than regular financing. If are you getting regular financing, stay away from 100%. REO properties need to be sold and 100% financing has the highest % of not going through.
Extra addendum’s will also follow your accepted offer.
If you have any questions regarding REO, post away. I’ll try to answer.