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Buying a Short Sale How To Buy An REO Why Buy REO? REO Buying Tips Strategic Home Buying Service Plan Dream Home Finder First Time Homebuyers New Homes For Sale HomeBuying 101

Buying an REO property offers definite benefits to homebuyers; especially first time homebuyers that want to get into the market. Once you decide that a bank-owned property is the right option for you, I recommend that you review some of these ground rules.

Do your homework; know how much house you can afford before you start looking
Get pre-approved for a home loan and make sure you have a pre-approval letter in hand when you make your offer
When you identify the REO property you're interested in making an offer on, ask your Realtor to determine fair market value on the property. In today's market, it's not unusual for an REO home that's priced right to get dozens of offers. It's also not unusual for the bank to narrow the field of multiple offers to 2 or 3 offers and require them to submit their Highest and Best Offer. A good strategy would be to go into the negotiation with a "Highest and Best Offer" mentality at the onset to ensure a better chance of beating out the competition.
Find a Realtor who has experience working with REOs; one that is savvy about the competitive REO bidding process. With REOs Patience is a key virtue . . . get used to waiting. It's not uncommon for a response on an REO offer to take up to 2 weeks. An experienced Buyer's Agent will know not drive the REO agent crazy by calling them every day demanding a response. They will know to be patient because they understand the REO process. An inexperienced, pushy Agent could seriously put your chances of success in jeopardy by driving an REO Listing agent nuts!
Make sure your Agent is knowledgeable about REO bank addendums. Every bank has them. They are written by and in favor of the banks. Be aware that the usual inspection and loan contingency clauses are generally modified. The removal of these contingencies might even become passive instead of active - meaning that if you have 10 days for your physical inspections, when that 10th day comes and goes if your Agent did not respond timely, it is assumed that you have ACCEPTED the property and any negative conditions that might exist!
Some banks will generally provide a termite inspection, but be prepared to pay for any required work! Get all your inspections out of the way as soon as possible.
Most REOs are sold in their As-Is condition so be mindful of your Lender's Required Repairs as well. Be sure the property qualifies for your particular loan. For instance, a property with no appliances and/or no floor coverings will not qualify for a regular FHA loan. Not only does the Asset Manager know this, but the REO Listing Agent will know and they will expect your Agent to know as well! So don't waste their time submitting an FHA offer unless it's a 203k rehab loan.
Credit for Buyer's Closing Costs should be limited to 3% maximum. The average lender feels that most of the REOs in their inventory are there because of cash strapped Buyers purchasing properties they didn't have the down payment for in the first place and the last thing they want is to see that property back in their inventory again.

As an REO agent, I've had Buyer Agents so impatient and over-eager that I started to think they were off their meds! They literally called me every hour! As an Asset Manager, I had Listing Agents that would forward me hourly inquiries they would get from pushy, rude Agents. In both scenarios Guess What? Who wants to work with pushy, hyper Agents for 30-45 days???!!! Not the Listing Agents! Not the Asset Managers! Banks are looking for the path of least resistance. Obnoxious, pushy, inexperienced Agents with bad attitudes are toast . . . that means, so is YOUR offer!

So if you're working with an Agent that won your confidence by boasting about how they haunt the REO Agent until they get an answer, you might want to rethink using that Agent, because it can negatively work against you achieving your goals.

Let me reiterate . . . The Most Important Tool You Can Have in Your REO Home Buyers Tool Kit is PATIENCE!

Patience with your Agent and Patience with the process! If you or your Agent don't have that - then going REO is Not For You!

GOOD LUCK! CONTACT US IF YOU NEED HELP.

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Tri County Residential Group
7828 N. Haven Ave • Rancho Cucamonga, CA 91730
Office: (909) 476-9600 •

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