About buying a bank owned property
An REO is a bank owned property. This is when the foreclosure process has been complete and ownership of the property reverts to the lender and the property is listed for sale.
If you are interested in buying an REO, as when buying any other type of home, you should first speak with a lender and obtain financing. This is important so that you can be ready to write an offer on a property when you find it. Banks selling property want to be sure that you are a qualified buyer; they will not likely consider an offer without proof that you can obtain financing or purchase all cash.
When you are looking at REO property you should know that when making an offer, you are dealing not only with a listing and or selling agent, you are dealing indirectly with an asset manager who works with the banks to sell their properties through a listing agent. When an offer is submitted, your price and terms will be submitted to the asset manager via the listing agent. The asset manager will then either make a decision on the offer or submit it to an investor that owns the loan to make a decision. Often times there are delays in this process because many people past the listing agent are involved in the decision. When buying an REO, it is important to remember that the seller is a financial institution, not a homeowner and has no emotional attachment to the property. This is important to you because, the bank only makes decisions based on what will serve its needs best. They are only interested in receiving serious offers from qualified buyers.
REOs are priced according to market conditions. In most cases the asset manager has hired several real estate agents to perform a Broker Price Opinion and have ordered an appraisal to determine the listing price. The lender wants to sell the property as soon as possible so they will likely price it aggressively to get a ratified offer within 30 days of listing. When making an offer, you should consider that the property is probably priced at or below the bottom of the market price. Although lenders expect some negotiation, understand that because they price aggressively, often there are many offers on each property and sometimes they are sold for above list price. It is VERY unlikely that they will accept an offer for much less than what it is listed for (especially during the first 30 days). REO inventory is very sought after. Submitting absurd offers trying to get a property for "bottom dollar" is a waste of time for everyone involved. You may only have one shot at making an offer, so when placing an offer, you should make it your highest and best.
The process of purchasing an REO is different than buying a traditional property. Dan and Traci & Consultants with Keller Williams Realty has the experience of both representing buyers in these transactions as well as representing banks to sell these properties. Asset managers hire few agents to represent them and are diligent about their hiring process and hire the best agents. We are grateful to be among the few real estate agents that banks rely on to sell their properties. Our experience benefits our clients that are interested in buying a foreclosed property.