Dealing with the Bank / Realator in REO purchase

technically you are dealing directly with the bank through their agent (realtor) but in some case, but more so on commercial REO's you can contact th lender directly and negotiate from there. I am currently doing that right now on a commercial REO. On the SFR you have a harder time because the lenders have so many they really can not dedicate the time needed to talk to every potential buyer so the spread them out to realtors that represent them directly

Thank's Anita - so with an REO, I will be dealing primarily (or exclusively) with the realator handling REO property for the bank - but who actually says YES/no to the offer ?
Is there still a bank official making the decision to accept an offer, or Is the REO realator given that right to accept an offer on behalf of the bank...

I am going to go visit some REO's this week..and I'm really excited about this..
So from Dean's book I've learned that when preparing an offer, you need to base your offer price on the property needs, i.e. estimated costs incurred to "fix up" the property....
Since we have so much experience here in this forum, I was wondering....do you, or anyone here, have additional tips for submitting, and negotiating a lower price for an REO ?

~/B

When dealing with an REO, you negotiate just like any other Real Estate transaction. The bank that owns the property is the seller and will accept or counteroffer any offer you make. The realtor is just the go-between. I am at the final stage of an offer today, myself, on an REO. The bank has come down considerably, not to where I want it, but I think I am still going to pick it up. Sign final purhase agreement later today with realtor.

Offer LOWWW on your REOs. Banks do not get offended like homeowners might. They'll either reject or counteroffer, no big deal.

Good luck, and have fun!!!

Rina

The realtor who represent the bank will tell you whether they will accept your offer or not. I'm doing a deal right now with the bank where i've made an offer and the bank made a counter offer. I made one more offer and the bank still wants more money from me.

I've done my research in terms of the comps, rehab estimates, closing cost, agents commission, piti, and my return will not look as promising as my original offered. The fact of the matter is, you have to do your calculation and see how much you could get out of the property, but then again, that depends on what you want to do with it. In my situation, i wanted to purchase the house, do some rehab and flip it, but when they counter offered, and re-counter offered and asked for more money, i back out of it.

Lloydsap

Knowledge without Actions is just a wish!

and both correct. let us know how it works out

Great info, thank's all.
So what about the closing date, with some situations its possible to push the closing date back a month or sometimes longer. Do banks typically have a preference or policy in closing quickly on an REO property ?
I'd like to make an offer that includes pushing the closing date back eight weeks while I work out the financing...
I know I can always ask and just see what the bank says- but would really like to know what people here have experienced...

consist of a 60-90 day escrow with monies to be paid at EOC (end of closing)

Great question to ask and as always, great answers. Taking this one more step that I have wondered...when the bank list the property with a Real Estate firm, do they also enter into a contractional agreement just as if I were listing my home with a Real Estate company. My contract might be for 3 to 6 months or longer, so is the bank doing the same? Above, someone mentioned dealing with the bank directly. Would that be in the case where they have not contacted a Real Estate company as yet?

let me see if I can shorten this one for you. Banks that have not contracted a realer on their side already probably wont and they are probably smaller hometown banks or credit unions like new horizons (Scott credit union) or something like that. In which case you can deal directly with them is they so deem.

When they use a realtor to represent them, the term of their contract is usually until sold or until put to auction, which is what happens to most REO's that do not sell during that 3-6 month time frame.

Tell us more about the "put to auction" part. I haven't heard of that before.

Thanks,
Rina

I think that may vary state to state. Here in DE I've seen reo's with 200+ DOM....maybe just a rare thing, but I've seen it.

We have some here that have been on the market for over a year. I have to check into the auction thing. I don't think we have that. I think they just keep dropping until it sells.

Rina

I think so too....(drop until sells)

Rina a lot of times and this depends on the bank and their specific practices, but they will list with realtors and after a certain time, usually 6 months or so, they will put property up for auction and it may still be listed as an REO . There are some that go up for auction 2-4 times before being sold but all of the time they are still listed as a straight REO on the MLS

Do they list them with an auction service, like online? Maybe there's a site that has different states' worth.

Rina

oh ok. That makes sense. Thx for making that clearer.

This is the auction I am going to next Wednesday.

check it out and read some of the stuff they post. They even post purchase agreements BLANK, so take a look it is us home auction look it up

Anita, I couldn't get into the site. Could see part of home page but just kept spinning. Technical difficulty? I'll try later.
Thanks for the link, though.

Rina

I'm currently in the process of purchasing an REO. You need considerable patience with the purchase of an REO. I first went to a Realtor and she found an REO that I was interested in purchasing. This was over 3 months ago. If it's such a great bargain, remember you are not the ONLY person that may want the property. I had to allow the realtor to make an offer on my behalf to a third party. That third party has multiple offers on one property. You have to wait to hear back from them and they have to wait to get a response from the bank. This took weeks, but my offer was finally accepted. Then there are many hoops to jump through. The third party will allow only so many days to close, or the property goes back to be bid on all over again. I couldn't find a way to get this property with 'no money down'. The bank dictates terms, not you. They wanted every detail of my live with the exception of asking for my blood type. Even with a FICO in the upper 700's and NO debt with the exception of other mortgages, you are scrutinized far more than a year or so ago. Good luck purchasing an REO. If anyone had an easy time purchasing and REO ....I'd like to hear about it !!!

I have bought 2 in the last 2 weeks. No major problems. (TBH.. The bank's moronic title companies were the biggest impediment.)

Yes, the bank wanted a LSR...

Yeah, there were some other conditions. (One bank wanted earnest money in the form of a cashier's check.) But nothing I thought was OTT.

Yes, the bank did NO repairs. (As stated in the listing.)

Yes, the bank did not provide a SPDS. (Also, as stated in the listing.)

Yes, both banks put per diems on a failure to close. (I flat out told my realtor I wouldn't pay since it was the bank's title company that borked the close. It never came up as an issue with either seller or title.)

When you say "terms", what does this mean? The bank dictated basically nothing to me except what I have written here. (THEIR title co mostly.)

Are you getting financing from the bank-seller?

When dealing with REOs, I basically negotiate nothing EXCEPT price. If I am getting a house at 50-60% of FMV, that needs under 10K in repairs, I don't worry about much else.

I would check out some other banks. Some may not be "dealing" but some definitely are.

GL,

Mark

Just out of curiosity, how close did you're offer come to the listing price?

Also, my realtor is going through the auction process with an REO she has listed. She's having a two hour open house on Sat. and Sun then the auction will occur on Tuesday. This is in Georgia and we are hoping to get down there quick enough to view it and possibly put in an offer.

Roni

Good question. As I recall.. I was around 10% below LP... Both banks countered and I accepted their counters. So we probably ended up around 5-8% below LP.

But this was after my realtor had culled all the over-priced junk, I had further culled the properties that just didnt work for me, and my realtor had walked the properties. In other words, the asking price was ALREADY a good deal.

YOU should have charged THEM per diem for not being able to close on time! I guess the banks don't think your time is worth as much much as theirs =)

Roni

I dont think it's that... The banks just want the property sold and there are a lot of wanna bes out there who couldn't buy an outhouse.

Plus, the decision maker is some salaried middle manager guy.

But it would have been interesting if the 2nd close had been delayed 2 more days as my lock would have run out.