I just responded to a question on Trulia Voices that inspired me to write a blog. A buyer in Camas, WA was frustratedÂ over inability to get anÂ offer acceptedÂ on aÂ 600k plusÂ REO property.Â He had written offers for much higher than asking price, with your typical contingencies (financing and inspection).... and stillÂ lost out on 3 homes! As a listing agent of REO's (a higher end REO in Camas just recently), here are some of the things that are considered by the bank in a multiple offer situation:
- Is the buyer approved through the bank that owns the home? Often times, if you are willing to use their preferred lender you have an advantage against other buyers.
- Does the buyer have "underwritten" approval through the bank & does it specify that on the approval letter?
- Have all the bank requested documents been signed and turned in with the offer?Your buyers agent will have access to these documents (via the MLS or the listing agent-I always upload mine so they are readily accessible) and each banks required paperwork is different.
- Is there a copy of the earnest money check/approval letter included with the offer, and is the earnest money a strong amount? 1% - 2% of the purchase priceÂ is typical in our market area.
- Was a copy of the proof of funds for the down payment included with the offer? Account numbers whited out of course. Any one can say they have 20% down... I say prove it!
Bottom line? Show your strength!!!!Â Â Â Â
All of the above documents are standard/required in offers that I present... especially when I know we are up against other offers. Typically included as well isÂ a cover letter explaining your credibility and willingness to complete the transaction in a timely manner. It is my job to show your strength as a buyer, and to convince the seller they are better off going with you.
As the listing agent of REO's, I can honestly say that 75% of the offers I get do not include the above. Those offers areÂ frowned upon by the bank because it shows lack of preparation on the part of the buyers agent, and lack of seriousness on behalf of the buyer.
Â Sometimes, it is not about money, its about credibility.... like in the case of multiple offers that are similar. All of the above are still absolutely critical, but different things are taken into consideration. Questions the bank asks me???
- What is your relationship with the buyers agent, and how likely are they to get this deal closed based on their previous track record?
- How likely is this buyer to ask for repairs or pick apart the inspection report? Are they asking for any in the offer?
- Are they willing to write a check for a high amount of earnest money to show they are serious? Anything less than 1% on a competitive listing is not acceptable.
- How well do you know of the buyers lender, and what reputation do they have locally? Have you closed deals with them, and have they closed on time?
My recommendation is to make sure you are using a buyers agent that has a lot of experience in selling/listing REO's, that is trustworthy with your personal financial information, that knows how to put together a strong offer presentation package, and that is readily accessible with paperwork in hand as soon as a great deal hits the market. REO's are aÂ different ball game than traditional sales, and require a special type of agent to "catch" theÂ steal of a dealÂ you've been searching for!Â
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