Foreclosure in 91364>Question Details

Aa, Home Buyer in 91411

What is the process of buying an MLA listed REO?

Asked by Aa, 91411 Sun Aug 24, 2008

I've been reading about buying REOs and I have a couple questions. Do you write into the bid that the contract will be void if the property needs significant work (per inspections)? I'm also curious why some people say they wait so long to hear from the bank after they submit a bid. When you submit a bid, can you say that you must hear from the bank within one week (or xx time) or your bid is void? Is there a reason people don't do that? Also, is there any use in bidding 20-30% below the asking price if there are comps that have sold for that amount?

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Aa, I suggest that you discuss your home buying p[ans with your Realtor. I agree with the other posts. The REO agents for the most part are seasoned veterans (although not all), lenders want to deal with professionals. Submitting an offer 20-30% below the listed price would only make sense if the property was really worth 20-30% less, and it seems unlikely that a lender would work with an agent that was incompetent.

Most REOs I have seen are slightly under market price. Also, no time constraints if you want to be considered. The asset managers are all over-worked and their departments are short staffed.
1 vote Thank Flag Link Mon Aug 25, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
I would also entertain strongly looking for other properties. I am a state licensed appraiser also and what I see is a continuing slide in values down which the lenders are trying to avoid by delaying accepting offers that are low. The lenders are the ones that created this mess, so as a buyer don't jump back in and get duped. Make sure your offer makes sense by working with somone who really understands the current market. Contact me and I can let you know what I see the property is worth. But shop around...., be ready to move on...,.

David Krecker, BSBA, SRA, MRA
Centuryside Real Estate Inc.
David Krecker
Broker/Owner/State License Appraiser
Office 562-690-6987
Fax: 562-690-7337
Serving the areas of Orange County, Los Angeles County, San Bernardino, and Riverside.

Web Reference:
1 vote Thank Flag Link Mon Aug 25, 2008
If you submit a low ball offer to the bank they will reject it and most likely not even counter because they have already done their own appraisal. The bank will not do any repairs even if you ask for them, that is why the price is so low. You have a certain amount of time, usually 17 days, to do your inspections. If you find that the property is not for you, then you cancel and you both go your way, but you have to do so within your contingency period. If you tell the bank that they must give you an answer within a certain time, then you shouldn't even put in an offer, because the bank has so much paperwork and has so many files to look at, that putting contraints on the bank will hinder your opportunity to purchase a home. That is the reason people and especially experienced agents do not do that (because they know that their offer will be rejected).
I have several REO's and I have never had any agent submit an offer with time constraints.
1 vote Thank Flag Link Sun Aug 24, 2008
Buying an REO is the same process as buying from a person for the most part. You don't have to do anything special. You would submit an offer, I would suggest using an agent because it's already listed and it's not going to cost you anything. The banks aren't going to give you a break because you are not using an agent. When buyinig an REO, consider as if you are buying it as is, don't expect to get repairs done, or cash back. The process can take time, but no where near like an REO, you may just have to wait about a week for an acceptance. Banks are leaning towards fast escrows and all cash offers, so if you have the ability go for a quick close and as much cash as you can.
1 vote Thank Flag Link Sun Aug 24, 2008
AA - good questions! You can write anything in that you want. Whether the banks will accept it is the question. An inspection contingency is common, and you should include one. People may be waiting a long time because they are offering on "short sale" homes that are not yet REOs. These take long times. Also, people may not think of limiting the contract, or may really want the home - even if they have to wait a while. In WI, the standard offer to purchase has a place to put an expiry date. IN MN, it doesn't. I would put a timeframe in offers on REOs, and have even done so on short sales (although those allow more time...). In MN, I have to write these in. If there are comps that support a price 20-30% low, then definitely go for it! The worst that can happen is a rejected offer, and you may get a counter, or even an acceptance! Best of luck!
1 vote Thank Flag Link Sun Aug 24, 2008
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