Bank-owned Properties: Nine Questions to Ask before You Write an Offer
Making an offer on a bank-owned REO property can be an intimidating process for prospective buyers. In most cases, REO sellers are not very flexible when it comes to terms of the contract, which means that you really have to do your homework in order to make a strong offer. Here are nine questions you should ask before writing an offer on any bank-owned property. Continue reading
Buying Bank Owned REO Properties
An REO (Real Estate Owned) is a property that goes back to the mortgage company after an unsuccessful trustee sale auction. In the event a bidder doesn’t come forward at the trustee auction, the property “reverts” to the bank. It becomes an REO, or “real estate owned” property.
The bank now owns the property and the mortgage loan no longer exists. The bank will handle the eviction or the tenant or owner, if necessary, and may do some repairs. They will negotiate with the IRS for removal of tax liens and pay off any homeowner’s association dues. As a purchaser of an REO property, the buyer will receive a title insurance policy and the opportunity to investigate the property.
Each bank works a little differently in the way they sell their REO properties, but they all have similar goals. They want to get the best price possible and have no interest in “dumping” real estate cheaply. Generally, banks have an entire department set up to manage their REO inventory.
Once you make an offer to purchase, banks generally present a “counter-offer.” It may be at a higher price than you expect, but they have to demonstrate to investors, shareholders and auditors that they attempted to get the highest price possible. You should plan to counter the counter-offer.
Your offer or counter-offer will probably have to be reviewed and approved by several individuals and companies. Even once an offer is accepted, the bank may insert wording like “..subject to corporate approval with 5 days.”
Banks always want to sell a property in “as is” condition. Most will provide a Section 1 pest certification, but not unless you include it in your offer and negotiate the point. They will allow you to get all the inspections you want (at your expense), but they may not agree to do any repairs.
Your offer should include an inspection contingency period that allows you to terminate the sale if the inspections reveal unanticipated damages that the bank will not correct.
Even though you agreed to “as is,” always give the bank another opportunity to make repairs or give you a credit after you’ve completed your inspections. Sometimes they’ll re-negotiate to save the transaction instead of putting the property back on the market.
Before making an offer, have your agent contact the listing agent and ask the following:
- Are there any inspection reports?
- What work has the bank agreed to?
- Is there a special “as is” form?
- How long does it take the bank to accept an offer?
- How does your agent deliver the offer?
Offers are usually FAXED to the bank. The listing agent needs your originals. There is no formal presentation. Keep in mind: nothing happens evenings and weekends (banks are closed)
Since there is no face-to-face presentation to the bank, provide the listing agent with a pre-qualification or better yet, a pre-approval letter and buyer biography. Make your offer easy to accept.
Remember that REO’s sell at pretty close to full market value and are not the deals they once were. Have additional REO related questions? Post your comment here and we will do our best to answer them for you.
A New Bill Concerning REOs And Retirement Penalties
The Housing Recovery Act of 2011 was introduced to the House of Representatives by Bill Posey (R-FL) . In essence, what the bill proposes is that people would have the ability to use qualified retirement plans to purchase a home that has been in the foreclosure process for over a year without paying early distribution penalties. While it may not be a total fix for the current housing situation, at least it’s a step in the right direction by trying to help.
What they are trying to stifle is investors who want to just “flip” homes. The encouragement within this bill is for owner-occupants and second-home buyers to create stability within neighborhoods, rather than the high turn overs (Remember the days when people actually knew who their neighbors were?).
On qualified homes (in foreclosure for a year or more), the buyer would have to use the funds from their Roth IRA, 401(k) or pension plan within 120 days of receiving them by purchasing a home. As the bill is in its early stages, no one quite knows when that qualifying “year” begins on any given home.
Whether Posey’s bill is “the answer” or not remains to be seen, but it appears his heart is in the right place (yes, I said it…a politician with heart). One thing is for certain, since lenders are requiring so much cash down prior to making a purchase these days, at least this bill should loosen up some funds for folks that have been wanting that second home and were previously unable to do so.
For more about buying REO’s and Foreclosure properties, please feel free to contact us or visit our main website at ArtisanRealEstateGroup.com
Are you an asset manager looking for the quick disposition of your REO assets?
Artisan Real Estate Group can help. Our team of professional agents is uniquely skilled at the quick valuation, rehab, listing and sale of REO assets. Our team has disposed of assets for Amtrust and JP Morgan Chase quickly and we would love the opportunity to work with you.
The initial step in the REO property management process is the BPO. Artisan Real Estate Group will provide your financial institution with an accurate opinion of the property condition using comparable properties located in close proximity to the subject property. This will aid in the process of determining whether it is cost effective to acquire the property at trustee sale or discount for quick sale at auction.
Once your financial institution has acquired ownership of the property at trustee sale, Artisan Real Estate Group will handle the process of current resident eviction, if required. After the property is vacated we will re-key and secure the property to prevent unauthorized entry and vandalism. At this time we will complete a visual inspection of the interior to assess and note damage, safety concerns and detrimental environmental conditions. Continue reading
What is an REO property?
| An REO (Real Estate Owned) is a property that goes back to the mortgage company after an unsuccessful trustee sale auction. In the event a bidder doesn’t come forward at the trustee auction, the property “reverts” to the bank. It becomes an REO, or “real estate owned” property.
The bank now owns the property and the mortgage loan no longer exists. The bank will handle the eviction, if necessary, and may do some repairs. They will negotiate with the IRS for removal of any tax liens and clear any remaining title issues on the property. As a purchaser of an REO property, the buyer will receive a title insurance policy and the opportunity to investigate the property. Each bank works a little differently in the way they sell their REO properties, but they all have similar goals. They want to get the best price possible and have no interest in “dumping” real estate cheaply. Generally, banks have an entire department set up to manage their REO inventory. Once you make an offer to purchase, banks generally present a “counter-offer.” It may be at a higher price than you expect, but they have to demonstrate to investors, shareholders and auditors that they attempted to get the highest price possible. You should plan to counter the counter-offer. Your offer or counter-offer will probably have to be reviewed and approved by several individuals and companies. Even once an offer is accepted, the bank may insert wording like “..subject to corporate approval with 5 days.” Banks always want to sell a property in “as is” condition. Most will provide a Section 1 pest certification, but not unless you include it in your offer and negotiate the point. They will allow you to get all the inspections you want (at your expense), but they may not agree to do any repairs. Your offer should include an inspection contingency period that allows you to terminate the sale if the inspections reveal unanticipated damages that the bank will not correct. Even though you agreed to “as is,” always give the bank another opportunity to make repairs or give you a credit after you’ve completed your inspections. Sometimes they’ll re-negotiate to save the transaction instead of putting the property back on the market. Before making an offer, have your agent contact the listing agent and ask the following:
Offers are usually FAXED to the bank. The listing agent needs your originals. There is no formal presentation. Keep in mind: nothing happens evenings and weekends (banks are closed) Since there is no face-to-face presentation to the bank, provide the listing agent with a pre-qualification or better yet, a pre-approval letter and buyer biography. Make your offer easy to accept.
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National REO Bulk Sale Now Available
46 home REO bulk sale package just released from major bank. BPO value of over $1,119,000. This is a nationwide package. Buyer must sign a letter of intent with lender. This portfolio will consist of REO properties available as a package. The buyer may not remove any properties from the package. The seller reserves the right to remove a property from the portfolio if necessary. Each potential buyer will be provided a list of assets which will include the property id. #, property address, property type, current BPO value, and realtor contact information. Properties are sold as is. Title will transferred via quit claim deed or equivalent. Each buyer will have a due diligence period to ascertain the information necessary before submitting a bid. Bid amount is to include $450.00 per property for recordation of deed and realtor fee.
Any potential buyers that are interested please email your contact information to info@artisanrealestategroup.com
Contact Us Today
(480) 560-5757
www.ArtisanRealEstateGroup.com
Robert Jeffrey, Designated Broker
6245 N. 24th Parkway
Suite 207
Phoenix, AZ 85016
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Together we help make certain you're bidding on a 1st lien hold position and you receive a Fully-Cleared Title Search within 12 hours. |
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