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Sonya Mays' Blog

By Sonya Mays, MBA | Broker in Milwaukee, WI

Tips to help you buy REO foreclosure properties


Despite tightened lending standards and credit challenges being faced by many consumers in today's struggling housing market, distressed sales are still predominant in many neighborhoods.  With the number of bank owned REO properties on the market, many buyers and investors are finding themselves in bidding wars or losing out on heavily discounted properties to higher, cash bidders.

 

The key to successfully bidding on bank owned properties or securing a foreclosed home may lie within several factors. 

Essentially, if you want to get in the game, you'd better get your game face on!

 

Here are 7 tips from RealtyTrac that can help you buy REO-Foreclosed properties in any market.

  1. Hire an REO/Foreclosure expert. When looking for an agent, find one that is well-versed, highly skilled and knowledgeable in the art of dealing with bank owned properties. REOs are very different from traditional or conventional real estate, so make sure your agent is extremely familiar with the process. They should have reputable negotiating and closing track records, and specific distressed certification, education or training is a plus. 
  2. Avoid lowball offers. Many REO properties are selling above list price so lowball offers are bad strategies. Bank owned properties are already aggressively priced so don't try to lowball the seller or your offer may be flat out rejected if it even gets reviewed. 
  3. Determine the value of the property, not the previous mortgage or the sheriff's sales price, these have nothing to do with current market price or bank listing price. It is also advantageous to understand and calculate any repair/rehab costs as well as operating expenses associated with an investment property in order to assess short term and long term investment strategies. 
  4. Submit a complete offer packet, with proof of funds or pre-approval recently dated. Be sure to follow the specific bank guidelines since each lender or seller has their own set of instructions.
  5. Prepare for multiple offers. Don't rely on your first offer, many properties have multiple competing offers.
  6. Prepare for counteroffers and be ready to negotiate. Unless your initial offer is at or above list price, many banks will automatically send a counter offer to begin negotiations. 
  7. Be prepared to walk away if you decide not to raise your offer or present highest and best during multiple offer situations.
Theses tips should help you get started with the foreclosure offer process.  Be sure to find a good agent that will represent your interest throughout the transaction.  Don't try to negotiate directly with the bank.  Banks use listing brokers to represent them and typically will not communicate or negotiate directly with  buyers or consider any offers before the property is listed.

Good luck with your offer and many happy closings!  

Source: RealtyTrac
For complete article, click here.

Comments

By Mark Acantilado,  Tue Nov 20 2012, 02:11
Good tips. This can be a good heads up somehow for those realtor agents having some tough time to gain REO properties and invest time and effort on it.
By Sonya Mays, MBA,  Sat Nov 24 2012, 17:23
Thanks Mark, I agree, it's a learning opportunity for anyone involved in selling REOs.
By Mike Collins, 608-921-8536,  Wed Dec 12 2012, 11:14
Thanks for passing along the info from RealtyTrac. You've added some great additions to that article.

Best of Luck!
Michael Collins

Feel free to leave a comment at my Trulia Blog as well!
http://www.trulia.com/blog/RockRealty/

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