This is Part 2 of the Blog on buying Bank Owned (REO) properties.
Despite perception created by some agents US banks are NOT desperate to get ride of their assets and they have well developed processes to NET the highest possible price for their REOs. Before an REO property is listed for sale; the Asset Manager has already received a Broker Price Opinion (BPO) with Quick Sale Value and a Fair Market Value.
So, you are negotiating with a well informed principal and is not in the dark about the potential of the property. But does that mean that there is no opportunity to buy an REO at a discount?!
The answer is a resounding NO since we have been able to acquire distressed properties for our investors at deep discounts. But you have to have a well developed strategy to succeed in your negotiations.
3) No Contingencies: Write a clean offer with no contingencies! This does NOT mean that you will not have an opportunity to order your inspections while you have the property under contract. It also does NOT mean that you can NOT walk away if you did not like the results of your inspections. We never had an Asset Manager make a play for a buyers’s deposit when they cancelled their offer.
4) Cash Terms: Schedule the close of escrow 2 weeks after your offers has been accepted. This will give you enough time to conduct your inspections. There is no sense to request a 5 day close cause there is no way an Asset Management company will be able to get approval from the investor that quickly.
Happy REO hunting and Contact US if you need help score a big REO.