Tips for Buying REO Properties in 2010
With the number of bank-owned REO properties expected to rise in the summer of 2010, here are 7 Tips that can help you snag a bank-owned property.
- Hire an REO expert with experience buying bank-owned properties in your local market.
- Avoid lowball offers. Since most bank-owned properties are being sold at list price or above, a lowball offer will not work in most markets. Consider submitting an offer slightly above list price.
- Determine the value of the property. You make your money when you buy, not when you sell. Also have an inspector and contractor evaluate the property and itemize all the repairs that need to be made. Subtract the cost of these repairs from the estimated value.
- Submit a complete package. Each lender has certain guidelines for submitting offers. Send a proof of funds letter, a bank account balance statement and a pre-qualification letter from your lender if you are using conventional financing.
- Write multiple offers. Don’t expect your first REO offer to be accepted. Competition is fierce. Be prepared to write multiple offers on different properties before you land one.
- Prepare for counteroffers. Banks will often send you a counteroffer at a higher price. You may be willing to raise your price slightly with the first counteroffer, but if a second counteroffer comes in, respond with your “best and final” offer.
- Be prepared to walk away. If the bank doesn’t’ accept your offer or you’re unwilling to raise the price during the counteroffer period, be prepared to walk away and find another deal.