REO Purchase - Should I use the bank that owns the property for the new mortgage?

Asked by New2Buying, Chicago, IL Fri Jul 26, 2013

The bank that owns the REO property currently is offering incentives to go with them as the lender for the new mortgage. Is this a good idea? Am I telling them I can afford more if I make a low offer?

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Evelyn S. Fred’s answer
Evelyn S. Fr…, Agent, Chicago, IL
Tue Jul 30, 2013
Selling bank doesn't necessarily mean a smooth(er) transaction, at least I've never seen it happen and I've been dealing with distressed properties since 2007.

Shop for the best mortgage rate and if this house is the one you want ask your broker to give you the fair market value and don't dawdle. This market is very hot and multiple offers are more of an expected scenario than not.
0 votes
Deb Russcol, Agent, Chicago, IL
Fri Jul 26, 2013
"Low offers" are almost a thing of the past. The market has changed DRASTICALLY in just the past few months. Don't read this the wrong way "The good deals" are still good deals. They just aren't GREAT DEALS any more. Those who took the risks 1 and 2 years ago got the best price. Now that the market is recovering you will want to consider not waiting too long or even the good deals will be gone and you will be in that uncomfortable position as a buyer in a real seller's market.

Follow the advice below and get your good deal now. while the prices are still disturbing low and the interest rates haven't really started that upward climb yet. Best to talk with a lender who is recommended by your agent. Next best is a lender recommended by a friend who has used them.

Go get your good deal now and good luck.

The Realtor Who Listens to Your Needs.
2 votes
Jacqueline S…, Agent, Chicago, IL
Fri Jul 26, 2013
Most banks require that you at least submit an application to them to put an offer in on the property. You should also shop around and commit to the loan that gives you the best rates and terms. They want to make sure you qualify for a loan before the accept an offer. They already have a range of what they will accept for the property documented. That amount will only keep going up as the market improves. Time is not your friend right now.
1 vote
Timothy Gall…, Agent, Orland Park, IL
Fri Jul 26, 2013
as others have said, If the property isn't overly priced, don't expect to get anywhere with a low offer. REOs are already set low. I had a client that kept trying to play that game and got no where. He just had to lose a couple before he would finally listen to my advise. Good luck
1 vote
Manuel Brown, Agent, Chicago, IL
Fri Jul 26, 2013
Dear Home Buyer,

Sometimes the incentive will work to your advantage and they would consider your offer over someone who does not use them. Of course this is illegal but let's talk reality 101. What you can do is of course is from your own lender find out what your rate would be and decide from there.

I send all my clients to Mary Kay Laurent with Guaranteed Rate at 773-516-6859. She is great and it is at no cost to you.
1 vote
Sally Grenier, Agent, Boulder, CO
Fri Jul 26, 2013
First, I would shop around. What is this bank offering that other lenders arent? Second....why would you make a "low offer"? Do you want to buy the place or not? You should be talking to your Realtor about these things. Most parts of the country are in a Seller's Market now, with very low inventory. If you really want to buy the place, then your offer should be based on "Fair Market Value" -- what similar properties have been selling for. If you offer based on "what I want to pay" or "what I think the place is worth, based on how much work is needed"... you probably won't get it.
1 vote
Bill J Delig…, Agent, Naperville, IL
Mon Jul 29, 2013
Do your homework and get the best deal on the purchase price and then shop around and get the best deal on the mortgage. They are independent of each other.
0 votes
Lorrene April, Agent, Orland Park, IL
Sat Jul 27, 2013
Absolutely not. You should find the lowest priced mortgage lender (Rate, Points and Fees) and get pre-approved, not just pre-qualified. Then, when you make your offer to the bank to buy their property, they have reason to take your bid seriously. I learned in my 25 years of selling real estate, that there are multiple points to negotiate on any purchase contract...price is only one of them. And you can make a great deal on the initial cost of your home (the purchase price) and still make a terribly expensive error when you negotiate the financing.

If you make a mistake on buying your home, you can lose thousands....but, if you make a mistake on the financing, you will lose tens of thousands!

I make certain, as part of my real estate services, that my clients are fully informed and make the best choices on their financing. There are three little utilized mortgage techniques to save a ton of money over the cost of the home. Banks never offer the best mortgage rates and fees.
0 votes
New2Buying, Home Buyer, Chicago, IL
Sat Jul 27, 2013
Thank you to everyone for your help. I appreciate all the advice. As my moniker indicates, I'm new to all of this. The reason I mentioned a low offer is because the asking price is at the top end of what I can afford. Not all the way there, but up there. It needs work, and I'd like to keep as much set aside for fix up work as possible. I'm not talking about offering half of asking however. Thank you again everyone!
0 votes
tony spagnol…, Agent, Lombard, IL
Fri Jul 26, 2013
This all depends .
Call and check rates and plans out .
Here is a number for you 630-687-9155 Linda - Branch Manager
0 votes
Philip Sencer, Agent, Chicago, IL
Fri Jul 26, 2013
They are 2 separate divisions so they will not be communicating. Shop around for lenders just like anything. It is irrelevant that who they are.
0 votes
Terry Farnsw…, Agent, Lisle, IL
Fri Jul 26, 2013
Where your financing comes from doesn't matter to them.

The fact that you are going to try to lowball them - will however. The asset manager handling the case will likely either counter you back $500 under list price, or ignore you completely and sell the property to someone else.
0 votes
Matt Laricy, Agent, Chicago, IL
Fri Jul 26, 2013
Low offers typically dont work in this market.

Also, which bank you use wont make a difference to them.
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0 votes
Jeffrey Olic…, Agent, Chicago, IL
Fri Jul 26, 2013
Sometimes those incentives are very good and other times maybe not so much. They are definitely worth looking into. As others have said, this is a sellers market and if you really want to purchase you need to be realistic. If it was a year ago, it might not have been bad to go in low, now if you really want it you can't.

Good luck and let me know if you need any help.
0 votes
, ,
Fri Jul 26, 2013
I would get your offer accepted before speaking with the bank about their offer - then compare what the bank is offering to a few other lenders. This way you can be sure that their "incentives " are truly the best deal. I would be happy to offer you a quote for comparison.
Sam Sharp
Senior VP of Mortgage Lending
Guaranteed Rate
773 290 0456
0 votes
Bob Brandt, Agent, Schaumburg, IL
Fri Jul 26, 2013
You should make a low offer if it is way overpriced, so the best way to know is to sit down with your Realtor and work through a market analysis together.
I would lean towards their lender and use the incentives.
0 votes
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