Bank Owned (REO), Financial Hardship, Foreclosures,
Here are some recommendation for REO buyers that we have complied from more that 6 years of representing Banks in REO sales:
1) New REO Listings: Asset Managers are NOT authorized to discount New REOs listings if the property has been in the market for less than 14 days! In fact, most Asset Managers will NOT consider CASH buyers prior to 14 days of marketing.
This does NOT mean you should ignore these new REOs, but just track them to see if they are closing or not. It’s a good idea to stay in contact with the REO Listing Agent and get updates on the progress of the sale in case it falls through.
2) Ditch your OWN Agent: If you want to win an REO property, your odds of winning increase significantly f you work with the Listing Agent. There is just too much inside information that you will not have access to and you might end up over-paying for an REO if you insist on working with your own buyer’s agent.
3) 90 Day Rule: The closer you get to a 90 days on the market for an REO, everyone in the food chain is anxious to get ride of the property which is very good for you investors and buyers. Why 90 days you ask!? Because the Listing Term for the REO is 90 days and the Asset Management Company could lose the property to an auction if it’s NOT sold. So, they are anxious for a deal and so is the Asset Manager at the selling bank along with the Listing Agent who needs to protect his/her commission after 90 days of work. Also, every month that an REO does NOT sell, the Listing Agent has to file a Monthly Status plan where they typically request a price reduction. So, in 90 days, the REO list price could have been reduced at least 2 times if not more.
4) Order Inspection: Order an inspection and if there are more than $3,000 of repairs, get 2 bids from your trusted contractors for the repairs.
5) Request Repair Credit: Granted that your buyer has signed a Purchase Agreement from the bank which clearly states that the seller (bank) will NOT pay for ANY repairs. But in more than 7 years of represneting banks on REO Sales, we have never seen a properly documented request for repairs denied. You can earn $15-30,000 of repair credit here, which in most cases should cover majority of your repair costs.
And there you have it. You have purchased a Seasoned REO for your client at $30,000 blow the list price which could have included 2 downward adjustments.
You are now hero and you would have investor offering to work with you on more REOs. Feel free to contact us if you need more information on these strategies to win REO deals.
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