How do buy an REO?

Asked by MGM, Palmdale, CA Sun Nov 9, 2008

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Ramon Vega, Agent, New Windsor, NY
Sun Nov 9, 2008
Hi Mgm,
If you are serious about buying a REO property your best bet is to contact a Realtor from your community. His/her job will be to educate you through the process, step by step until you are certain you have a very good understanding of the transcation for you to make a sound decsion. When you work with a realtor you are not have YOUR realtor and his/her company on your side.
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Vicky Chrisn…, Agent, Purcellvile, VA
Sun Nov 9, 2008
MGM - I wrote a series of posts... you may find this helpful. I am in a different market place, so you may find some variations... HOWEVER, to the extent possible, the banks/servicing companies use the same system nationally, so you're likely to find this information helpful.

If I can recommend an agent in your area who knows the ropes on helping clients purchase REOs, you can email me directly.
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CJ Brasiel, Agent, San Jose, CA
Sun Nov 9, 2008
Mgm -

You will need a pre-approval from a established lender. Sometimes a "no-name" broker pre-approval letter will not fly. Also, confirm with the agent that there is not a dictated lender to pre-approve with. Some will offer free appraisal and loan aps if the pre-approval is through their desired lender. Either way, a pre-approval is essential.

Have your agent run the comps of last 3 months within one mile of listing you are interested in. Also look at active listings and compare with a walk through. Know the value and know what you are willing to spend. Have your agent or other professionals help you estimate any repairs needed (if any) to move in. (Paint, sod, appliances...)

The cleaner the offer the better. Expect to hear " your offer has been countered and the owner would like to see your best and final offer." if your offer is accepted, be clear on contingency periods (they are passive releases with many REOs). Above all, read everything very carefully.

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Jacqueline W…, Agent, Irvine, CA
Sun Nov 9, 2008
It is critical you find an agent experienced in bank-owned sales. Buying from a bank can result in getting a great deal, but it also comes with a mine field of potential issues that require the guidance of an experienced professional. The sales process is often nothing like the one we generally use in California....the banks often use their own forms (addendums) which are drafted to protect the seller, not the buyer. Contingencies are often subject to passive removal and the seller's agents are often overloaded with files and disconnected from the process. Interview agents in your area and make sure the one you choose has the relevant experience.
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The Hagley G…, Agent, Pleasanton, CA
Sun Nov 9, 2008
First of all, get pre-approved (unless you are paying cash) so that you are good to go once you find the home that you are interested in. Then, find an experienced Realtor. This is important because lenders are getting smarter about pricing REO properties...often underpricing to generate multiple offers. Your Realtor need to know the market in order to advise you on an offer price that will at least get a call back.
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