How do I buy a home from the bank (forclosure REO)? Does anybody knows how long the process takes? Thank you.

Asked by Anna, Florida Sun Jun 1, 2008

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Katina Wright, Other Pro, Atlanta, GA
Sun Jun 1, 2008
Greetings Anna,

EVERYONE is right; however, some important issues have not been addressed. I am an REO specialist in Metro Atlanta, meaning, I work for the banks. In this current market your biggest hurdle regarding purchasing REO listings is your Financing.

How are you going to pay for it? Are you getting an FHA, VA or Conventional loan product?

Why does that matter? It matters because the condition of the home will affect your ability to secure financing. Some Houses will not qualify for 97% (formerly 100%) financing due to the condition of the home (copper wiring stripped from the walls, AC Unit destroyed, hole in the sheetrock, cracks in the driveway). Your Lender will be able to advise you as to the restrictions of your mortgage type.

Do you have a minimum loan amount? There are homes for sale in the Atlanta market priced below $30,000. There is a limited number of Lenders who will fund loans below $50,000.

Do you currently have a mortgage in your name? If so, you will be hard pressed to find a lender who will not require 20% Down as an investor.

Lastly I invite you to review my Foreclosure Buying Guide which is posted to my website, the link is posted below. If you would like to download a copy via email visit Unlock Code: 332499. The report will appear in your inbox.

Your primary objective is to get a Nice Home for a Good Price so don't limit yourself to REO. There are a lot of MOTIVATED SELLERS in today's market, bank owned or not.

Good Luck to you!
1 vote
Robin Sing-C…, , Fort Lauderdale, FL
Sun Jun 1, 2008
Matt is correct. It seems Jim has confused an REO with a short sale. The bank asset managers are experiencing a deluge of foreclosure properties they are taking back.

It takes a while for them to get through the process and to be put back on the market, but once they are listed for sale the process for buying a REO property can be very fast. It is not much different time wise than dealling with a normal homeowner.

Sometimes the banks may want to wait a while and see what kind of offers they get, sometimes they move very quickly.

If you find a property that you like and if the numbers make sense, often times the bank will be quick to respond. They will however require additional paperwork to be executed so it's best that you have an attorney or competent and experienced agent (someone who has actually worked in the REO market)

Fore more information on bank foreclosures visit my blog for a lot of information on buying foreclosures and bank owned properties.
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Pacita Dimac…, Agent, Oakland, CA
Sun Jun 1, 2008
Hopefully, you have a realtor working for you to help you through the process.

Everything hinges on how responsive the lender is, and how good your offer package is. You may only get one shot at this, so make sure you submit your best and highest offer, and that your package is complete with your preapproval letter, copy of your initial deposit. In some cases, the lender also asks for information on the buyer's FICO score. To further expedite the process, you should state this is an AS IS offer. Sign all the disclosures if they're already provided, and submit these with your offer.

Depending on the degree of completeness, you may even be able to get an answer within 1-2 weeks(which is totally different from short sales that may take upwards of 45 days to get a response!).

Sometimes, the highest offer doesn't always get accepted. If the terms are good (like shorter or no contingencies, shorter escrow, higher initial deposit, higher down payment, etc), a lower offer may beat a higher offer.

Good luck!
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Forefront Re…, Agent, Rancho Cucamonga, CA
Sun Jun 1, 2008
The first thing you need to do is get a reliable, local agent and have him/her start emailing you REO listings. And more important than that is to get a full credit approval from a lender's underwriter(that's the person that actually makes your loan decision). Don't take ANY prequal letters from agents or generic form approval letters from a mortgage rep. Rule of thumb..If it's written on a Word doc, it's worthless. The lender credit approval will then make any offer you put in for an REO that much stronger. Because most everyone else takes the easy way and gets the prequal letters. Keep in mind, the seller is a bank. They are very aware of what an actual approval is. Once that step is done, and you've put in an offer, don't stop. Keep looking around.The gentleman that answered before me is correct. REO's can be 45-60 days from start to best. However, because of the increase in bank owned properties, those banks are actually starting to become more responsive. I personally bought property several years ago in Cape Coral. If you happen to be in that area, contact Dennis Rossman of Rossman Realty.239-542-2084. He is, without question, one of the most knowledable brokers I've ever met. If you have any general questions you'd like help with, my contact information is in the link below....Good luck.
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Mott Marvin…, Agent, Sunny Isles Beach, FL
Sun Jun 1, 2008
I don't intend to "step" on Jim, but actual REO's are rather quick and simple. The short-sales on the other hand are time consuming and uncertain.
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Jim Johnson, , 78233
Sun Jun 1, 2008
You really should get together with an experienced agent under a buyer agency agreement. The process takes a long time, and is fraught with uncertainties--so you need to be extremely patient. I've seen REOs take upward of three months to close, and this forum is packed with cries for advice by buyers who are waiting for some idea of how long they can expect to be waiting just to get some info about their offer.
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