There are several differences between real estate transactions of a bank owned REO property and a non bank owned property. When considering the purchase of an REO foreclosure, also referred to as bank owned real estate, there are simple instructions to follow for a successful transaction for all parties involved, including the Listing Agent, Buyers Agent, Asset Management Company, and the Buyer. These 15 recommendations are designed to assist you in understanding the expectations involved in purchasing an REO foreclosure, and can vary slightly from seller to seller.
- All offers MUST include the California Residential Purchase Agreement, lender pre-approval letter and/or proof of funds, copy of the earnest money check, and a copy of the current MLS printout. It is not necessary to include office forms or disclosures. Offers will only be submitted to the seller when all of these items are provided. Additional addenda will be signed only after an offer has been verbally accepted by the asset manager. All offers on REO foreclosures listed by the Re/Max of Mammoth REO Department are to be submitted directly to Deanna Lantieri.
- Multiple offers are common on REO foreclosures, and all offers will be presented to the seller. However it is the sellers sole discretion to disclose a multiple offer situation. The seller may accept an offer without notifying all parties of the multiple offer situation.
- Offer response from the seller will take a minimum of 24 hours and can take as long as 2 weeks or longer to get a response regarding the offer submitted on the bank owned property.
- When purchasing an REO property, there are NO DISCLOSURES from the seller and the property is sold “AS IS” (not “AS IS” with limited warranties).
- Any personal property on the premises is not warranted and should not be included in the purchase agreement.
- All negotiations are verbal until final contracts and addenda are signed by the seller. Some sellers may require original documents with buyer signatures. It is the Buyers Agent’s responsibility to provide the documents to the Listing Agent. All verbal offers are subject to senior management approval.
- Seller will not issue a written rejection or written counter offer for the Buyer. Buyers Agent and Buyer will be notified of the seller’s decision by the Listing Agent.
- Once an REO offer is accepted verbally, the corrected contracts, all addenda, and a copy of the earnest money check must be received by the Re/Max of Mammoth REO Department c/o Deanna Lantieri within 24 hours of acceptance, and the earnest money check must be issued to the Title/Escrow Company via a certified bank check or money order.
- Seller will not make any repairs after the contract is signed.
- Buyer and Buyers Agent must verify all property information, including the size of home, lot size, schools, taxes, home owners fees, etc.
- There are penalties for closing delays not caused by the seller. The per diem, as instructed by the seller in the purchase agreement or addenda, is part of the contract and is not negotiable.
- Regarding utilities, some banks will allow the utilities to be turned on in the Listing Agent/Office name and/or will pay the de-winterization. Some will pay for re-winterization but not de-winterization. Consult with the Listing Agent to see which situation applies to you. If the Buyer and/or their appraiser or inspectors require the utilities be turned on for inspections, and they are not currently on, the Buyers Agent will need to make the necessary arrangements to meet the utility company(s) at the property at the time of the connection. The utilities will be shut off after inspections.
- At no time will the Buyers Agent forward the lockbox combination to anyone, including the Buyer, the Buyers contractors, inspectors, or any other party. The Buyers Agent must be present for all showings, inspections, or visits to the property. Absolutely no repairs, renovations, or alterations of any type shall be performed by anyone before the close of escrow without consent of the seller.
- All offers are subject to sellers acquisition of clear title. This and other seller related issues can cause closing delays.
- Upon acceptance of an offer most REO sellers do not accept back up offers. If the property falls out of contract the property will be re-issued to the open market.
Being aware of the complexities when purchasing an REO foreclosure, and knowing the expectations of the seller, will not only help improve the odds of getting an accepted contract for purchase, but will also produce a smooth transaction for both Buyer and Seller. For assistance while submitting an offer on an REO foreclosure listed by Re/Max of Mammoth, contact Deanna Lantieri, for up to date and seller specific instructions for submitting the offer correctly.