Foreclosure in Tracy>Question Details

Brenda, Home Buyer in Fremont, CA

How do I find out if this is on the level?

Asked by Brenda, Fremont, CA Thu Feb 7, 2008

We were pre-approved for a loan, so we put in an offer on an REO in Tracy. The bank that owns it requires that we must first get pre-approved through them before they will even consider looking at our offer. Is this normal, or are they using this as a way to negotiate with us?

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I have seen many REO lenders require this as it is the only way that they can be absolutely sure that you can qualify for the financing and you will be able to purchase the house if they sign a contract with you.

They will also have your financial information and know that you may have the ability to pay more for the property, but that doesn't mean you are willing to pay more than what originally offer. If they counter your offer with a number you don't like, either counter back with a number you do like, or walk away.

They are in the business of lending money, not owning property so they will want to sell the property as quickly as they can. And you never know - they may offer you terms that are more attractive than the bank who as pre-approved you.

Hope that helps.
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2 votes Thank Flag Link Thu Feb 7, 2008
Brenda- Yep- it's the norm for banks to do! Nothing strange there at all. As an agent I even require many of the buyers on my listings to be preapproved by my lender- especially if they are coming in with 100% financing. I don't want my seller's time wasted by someone who really doesn't qualify for a loan. They are doing it for the same reason.

Patti Phillips 800-680-9133
2 votes Thank Flag Link Thu Feb 7, 2008
Brenda, I just had an offer that was accepted on a REO and initially they told me the same thing about being approved through them. I'm not sure if it was the right thing to do or not, but my lender called and spoke with them. As a result, they no longer felt like I needed preapproval from them.......I was worried but soon found out my offer was accepted. Good luck
2 votes Thank Flag Link Thu Feb 7, 2008
Sorry Brenda, but I agree with the ladies. It is common place. This REO/Bank Owned/Foreclosure market we are in here in the Ca Central Valley is beyond anything we have ever seen before. The sheer numbers are staggering, and most banks are overwhelmed with the details, so they try to keep it close to home, believing it makes it easier on them. Patience is the key phrase in dealing with REO' et al; I wish you the best. It's still a great time to buy in the Central Valley! "The Coach"
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2 votes Thank Flag Link Thu Feb 7, 2008
I agree with Dot and Julie. It is normal for the banks to require this, they also want to see a copy of a good faith deposit check. -- And yes it is part of their overall negotiating strategy with ALL of the buyers. (not just you ) They want to negotiate only with buyers who follow their procedures.

The bank execs figure since they are losing so much money on their bad investment, they want to at least be able to boss the buyer ( who is supposedly getting a deal ) around a little bit.
2 votes Thank Flag Link Thu Feb 7, 2008
Jim Walker, Real Estate Pro in Carmichael, CA
HI Brenda. It's not out of the ordinary at all. It doesn't mean you HAVE to use them for your loan, but you will have a choice in case something happens with the other bank.
2 votes Thank Flag Link Thu Feb 7, 2008
Brenda, most of the banks do require buyers to be pre-approved by their bank
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2 votes Thank Flag Link Thu Feb 7, 2008
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