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Brian Halste…, Real Estate Pro in Miami, FL

What every buyer should know before shopping REO, Bank Own Property?

Asked by Brian Halstead, Miami, FL Tue Oct 12, 2010

Nearly 40% of the properties on the market for sale are bank owned and buyers are very interested, for the obvious reason "PRICE" some REO are priced up to 50% below market but how can we help buyer’s especially first timers to understand that these are not your typical, buy a property from any seller kind of sale. These are Bank owned and banks are not people they do not care how badly you need the home or weather you are a single Mom with two kids, they accept only the highest offer usually cash and answers on there time. So usually there are multiple offers and the realtor can do there absolute best and still they fail to win the deal. It usually takes several attempt with different property before a REO is finally placed under contract, unfortunately by that time Buyers are long gone, they do not stick around but move from realtor to realtor until one gets lucky and get them a contract on the first try. What else can we do to educate buyers about buying REO properties?

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I advise my client to get a written pre-approval from a well known Direct lender or Bank for an FHA 203K Streamline. That way it makes their offer almost as valuable as a CASH offer -- except it requires more time to close. Also I make sure my contracts are immaculately clear typed and scanned documents and ONLY email to the listing agent. I don't call the listing agent needlessly unless I don't get email confirmation back that they received my client's offer. The listing agent can immediately upload the offer to the Asset Manager.

Also what is important to communicate to a buyer is that although the asking price may be $100k, if the comps show it may be worth $140k you will need to offer "more" than the asking price and no more than 3% for closing costs.

Lastly, owner-occupants have first chance at Fannie Mae owned properties so you may want to show those properties first.
1 vote Thank Flag Link Wed Oct 13, 2010
If you are giving your buyers that speech from the beginning I dont know what else you can do. I would talk to them about finding several bank owned properties and sending in multiple offers. The banks will always send an addendum and if they happen to get more than 1 back they can accept the one they like the best.

Just let them know you will be working for them and continue to show them other properties to keep them interested while you are waiting on a response from the bank.

Banks like the highest price but they also like a confident buyer. Put a larger earnest deposit down.

You also want to work with a lender that understands this process and can assist you in comforting the buyer and keeping them on board.
1 vote Thank Flag Link Tue Oct 12, 2010
I advise the buyers to submit to the bank their "highest and best offer".
1 vote Thank Flag Link Tue Oct 12, 2010
I agree with Randell 1000%. The sooner agents realize that we work for profit in a business and not as "free" helpers for lookers, tire-kickers, unrealisitc buyers & sellers, tour guides and such, the better we will be sewrving our real estate communities with professionalism & efficiency. This is a business folks, treat it as such.
0 votes Thank Flag Link Wed Oct 13, 2010
We can stop giving away advice and ask them to speak to a qualified Realtor
0 votes Thank Flag Link Wed Oct 13, 2010
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