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Working With REO Buyers

by Chicago Agent

by Joe Stacy

Helping your clients purchase an REO property creates a great financial opportunity for them. Here are some tips to increase your chances of success.

  1. Be organized. REO agents have several properties they are dealing with. Providing everything they need can make the difference in your offer being submitted or not. Things to include with your offer:
    1. Mortgage pre-approval.
    2. Proof of funds if submitting a cash offer.
    3. Fully signed bank addendum if provided in MLS.
    4. Make sure all pages of the contract and addendums are filled out correctly and signed by all buyers listed on the offer
  2. Make your offer as strong as possible. Try things like increasing the earnest money amount. Consider writing a cash offer versus having a mortgage contingency. Have the buyer go with conventional financing if possible, as banks don’t want to mess with FHA/VA loans and appraisals. Make closings as quick as possible, but make sure to leave enough time for your lender to close the loan. Banks don’t like giving mortgage extensions!
  3. Prepare your client to pay the listed price. Banks have already aggressively priced the home, many times well below the market. Prepare your client for the fact that because they have already priced it aggressively, there may not be a lot of negotiating room. Most REO properties sell close to, at or over list price.
  4. Time is of the essence. Write your best offer to get a quick acceptance from the bank rather than trying to negotiate off a few thousand dollars, allowing other offers to come in and compete with yours, leading to a missed opportunity.
  5. Instruct your buyer to be patient. Sometimes, it takes two to three days to get a response from the bank and the bank usually doesn’t work or respond to offers on the weekends. Don’t continue to call the agent asking if they have heard anything. In this case, the squeaky wheel does not get the grease!
  6. Prepare for fees. Once your offer is accepted, typically there is a fee charged to the buyer to de-winterize the home for an inspection and to re-winterize it afterwards. Make sure the buyer is aware that they may incur this cost. This process can also sometimes take upwards of a week.
  7. Carefully schedule the appraisal. Consider setting up the appraisal either during the inspection or shortly thereafter. If the house is re-winterized after the inspection but before the appraiser comes through, the mortgage company will charge a re-inspection fee to have the appraiser come back through to verify that all utilities are in working order.

Joe Stacy is an agent with Koenig & Strey Real Living in schaumburg. he can be reached at 847.874.6731, or by e-mail at joe@joestacy.com.

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