Buying REO homes (Real Estate Owned homes) takes creativity and persistence: Negotiating with the banks is necessary, your offer may or may not accepted, it will take several months to complete the process.
There's just this problem, several REO investors don't think like banks. They think their offer is reasonable, the home and property has languished on the market forever, and they could not understand precisely why the bank is not returning their calls.
This may all be true, however you have to keep in mind that it is the bank that holds the key to REOs; the dollar starts and stops with them. Once your offer will not be accepted, you don't have a deal. A little homework before you make an REO offer can lead to a lot less headache in the long run.
Your primary goal is to get the bank to say “yes” to your offer. The more knowledge you have with regards to the aspects a lender uses to assess a REO properties can result in a less complicated sales procedure and, in the long run, bank approval of your offer.
Evaluate Your REO Home Deals Like A Bank
Regardless how much your offer is, the bank is going to always think the house and property may be worth more. It’s that easy. Lenders agree to an REO based on a percentage of what banks believe is the “as is” value of the home and property. Every lender has a different approval percentage, and these figures can change.
Your main goal is to offer just enough so the lender quickly grants your offer; practically nothing more and nothing less. Being familiar with the approval percentage is fifty percent the battle; the other portion involves the as is property value in the lender’s eyes.
This relies on the broker’s price opinion (BPO), involving three comparable sales, three active listings, local market conditions as well as other evaluations. The BPO is usually conducted by a real estate agent and even includes an interior and exterior “drive by.” Lots of lenders also use appraisals.
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