Buyer Strategies
What to offer:
REO banks like offers with little or no contingencies, cash offers, "As Is" purchases, larger good faith deposits, shorter escrow periods, larger down payments, and shorter loan approval periods, if you are obtaining financing (See the "Buyer Checklist" page).
Ask your agent for recent comparable sales in the area.
Check the "market stats" page on the website to find out the overall market data for the specific area especially what the average list vs. sales price ratiobecause this will give you an idea of how low other REO banks are willing to go, if any, below their asking price.
Check the listing history: how long has the property been on the market and was there a recent price reduction? If a property was just listed with an agressive price it is likely there will be other offers in competition with yours so it may not be a good strategy to make a "low ball offer."
Important! Remember that REO properties are not always the best deals. To get the best deal, you want to find the most motivated seller. It should not matter how much below the asking price you can get a property for, it should be the final selling price. If property 'A' is $50,000 overpriced at $200,000 and property 'B' is a very comparable home with an asking price of $150,000, wouldn't you rather buy property 'B' at 98% of the asking price ($147,000) rather than property 'A' at 85% of the asking price ($170,000)?
REO Negotiating Process:
If a bank receives multiple offers, which is often the case, they can either; (A) take the offer they like the most, (B) reject all offers, or (C) (what they usually do) ask all participating buyers to submit their highest and best offer within 2-3 days. Once they receive all of the "highest and best" offers, they will often choose the one offer they like best. Important:this may not always be the highest priced offer. REO banks may elect to go with a lower cash offer rather than a higher offer with a small down payment.
Once your offer is accepted:
1) Your good faith deposit is deposited at the title company and escrow is opened.
2) Banks are not subject to many of the disclosure requirements that conventional sellers so you will only be given the statutory disclosures.
3) Day 1 of the contract begins the day after acceptance. This begins the clock to perform any inspections, review disclosures, and work with your lender (if you have one) to obtain final loan approval, and deposit any remaining monies into escrow. Banks will often give buyers 10 days to complete any and all inspections.
4) Once everything is in order the title company will arrange for you to sign closing papers. Once you and the seller have signed, the title company distributes the funds, record the deed at the county court house and you become the new owner!
