Many home buyers today are searching the websites looking for properties that are Foreclosed or Real Estate Owned (REO). What are the obstacles when making an offer?
Let’s consider the process that the property has been though to date. The process may have been over 2 years to get to the point of placing the listing on the MLS. It could have started out as a short sale, this would have allowed for the bank to allow the owner to get out of the deed with selling for a much-reduced price than the original loan was written. This probably didn’t happen if the home is Bank owned. The second was that the bank legally took the home back through a process called foreclosure.
Most of the properties are given to a handler or clearinghouse per se, this is a company that does just that, they get a percentage of the sale price to handle the transaction. These companies then give the Bank Owned Listing to their real estate broker in the County of the property. The listing broker then gets the Market Value of the homes sold in the neighborhood or subdivision of the target home or land. The home is listed with the MLS with certain differences that are very specific.
· No property disclosure is needed
· Home is Sold as is where it is
· Banks may use their own contracts
· The buyer will not have choice of Title Company
These are just a few of the differences, but there could be more. Bank properties are for the most part very much up front and predictable. What could throw a kink in the process is the fact the banks require up to a week in business days to respond back to the buyers offer and during this time other offers may come in at the same time. The remedy for this is to submit a complete purchase and sale agreement along with the buyer’s mortgage approval letter on the lender letterhead. Send any additional paperwork required in the instructions to the realtor.
Lastly, don’t try to low ball the bank unless you are prepared to pay cash. They may consider a cash offer if it meets the needs of the sale. Always know that a home inspection is needed to determine what if anything is wrong with the house. The Banks do not know the condition of the property for the most part and neither does the listing Broker.
Finally, make the contract as clean as possible. Meaning follows the bank instructions and doesn’t muddy the contract with asking the bank to fix certain areas unless the bank said they would. Remember, there is not a contract unless it is signed and dated by everyone. Verbal contracts are not legal in real estate transactions.
Work with me, I am your Realtor/agent for Idaho short sales and Bank homes. I provide you with all of the information to determine if an REO is right for you.