The key to getting a bargain on a bank-owned property is DOING YOUR HOMEWORK and working with an agent who KNOWS THE NEIGHBORHOOD and HAS EXPERIENCE WITH REO TRANSACTIONS. The "seller" is a bank executive sitting behind a desk in a different city--often even in a different state! The seller has no knowledge about the property--they can't tell you whether the roof leaked last winter, whether Aunt Nellie died in the back bedroom, whether the neighbor owns a nuisance dog, or whether the city plans to build a parking lot across the street. For this reason, you have to work with a good home inspector, converse with the neighbors, call the local building & planning department, and study the environmental and natural hazards reports. An experienced BUYERS AGENT can point you in the right direction and save you from potential pitfalls.
Furthermore, your BUYERS AGENT can help you evaluate the real value of the property so you are prepared to act decisively--without over-paying--if you get into a multiple offer situation. Remember that an offer is not only about PRICE, but also about TERMS. If you have all cash or a very large down-payment, you can offer a quick time period for closing escrow....if you don't have that big-cash advantage, you should be prepared to bid towards the higher end of the property's possible price range, in order to convince the seller to give your FHA-offer a chance.
Also, you have to pick the right KIND of REO property for your situation. Since an REO seller will generally NOT agree to do any repairs, an FHA buyer has to pick a home that is already in good, habitable shape in order to satisfy their FHA appraiser and lender. An all-cash buyer can take a chance on buying a house with a leaky roof, a rotted porch or a non-permitted garage-converted-to-bedroom....these can all be great bargains at the right low-ball price! Your BUYERS AGENT can help you identify the right kind of target for your REO offer.
I keep emphasizing the importance of working with a good BUYERS AGENT because you can't necessarily trust the seller's agent to represent your interest whole-heartedly if push comes to shove. The listing agent works first-and-foremost for their bank/seller client, who is going to give them a lot more business in the future. A BUYERS AGENT can be crucial in keeping things in perspective for you, sticking up for your side in a dispute, and pointing out ALL your options. You should really have the feeling your agent is in favor of YOU, not just in favor of the DEAL.
So be sure to look for an agent who specializes in representing BUYERS and has experience dealing with REO transactions---since we don't hang our signs in front of anyone's house, you usually have to find us through a web search or through word-of-mouth recommendations.
If you'd like to talk in more detail--about the ins-and-outs of an REO purchase, or about the market trends in Carmel, Pebble Beach, Monterey, Pacific Grove or Salinas--feel free to contact us through our websites:
, http://www.PebbleBeachOnSale.com, http://www.MontereyOnSale.com, http://www.PacificGroveOnSale.com.....you
get the idea! Hope to hear from you soon.