9 Essential Tips For Buying REO Properties

Tips For Buying REO PropertiesThe best way to find REO properties is to follow the market.

The first step is to watch the newspaper for Notice of Defaults, which is a leading indicator of upcoming foreclosures that could be coming to the market. The next step is to follow the Trustee’s Sales. These are properties that have been foreclosed by the bank, and will be available for purchase at public auction. The county recorders office and/or title company can be a good source for upcoming property auctions. The final step is the homes that do not sell and ownership of the property reverts back to the bank. Bank owned real estate (REO) will be managed and sold by a local real estate agent. Keep your pulse on the market, watch for upcoming properties, and follow the inventory closely.

What is your ideal property?

What will it offer you? What can you afford, or are you willing to spend? Where will it be located? How many bedrooms, baths, etc are you looking for? These are all great questions that you may want to make a list of, to know what your ideal property looks like. Knowing what you are looking for will help you narrow down your search, and if you decide to work with a real estate agent to help you find that property, it will give them direction to provide you relevant property listings.

Working with an experienced REO agent can save you time and give you an edge that you may not have if you are looking for properties on your own.

An REO agent usually has an idea of what properties are coming to market. This is especially true if you work with an agent that manages properties for the bank. These agents generally have a pipeline of properties that will be coming to the market, and can help you find a property that others would not necessarily know about. When you work with an REO agent, you have the best chance of finding a property that will meet your needs.

Will you be an all cash buyer or secure financing to purchase your home?

When you are purchasing an REO property, ask the agent if financing is available. Some properties do not have financing available, and therefore they would require all cash to purchase. Other properties such as Fannie Mae and VA may have special financing and incentives to purchase the home. It is a good idea to make sure that if you are going to be financing the purchase, that you work with a lender to get pre-approved. Working with a lender that understands the process of financing REO properties, will help you close the transaction on time.

Be ready to submit the offer when the opportunity presents itself.

You may have been looking for an REO for many months or just a few weeks, but regardless of how long you have been looking, do not hesitate to submit an offer when you find a property you are interested in. REO properties are very popular, and waiting may leave you open to other individuals also submitting offers on the same property. Be ready to pull the trigger as soon as you find the property you like, to increase your odds of being the buyer who gets the accepted offer from the bank.

A property inspection is generally a good idea.

REO Property InspectionOnce you have an accepted offer, you will have a specified time period (usually 10 days) to perform your inspections on the property. Up until this point you have spent the time looking for a property, found the one you like, now you have the chance to make sure that the property is in acceptable condition for you to move forward with the transaction. Hiring a property inspector will help you determine the condition of the property, which is not apparent from just walking through the home. They inspect the roof, electrical, plumbing, and heating and air conditioning, and even go as far as crawling through the attic and crawl space of the home. They will deliver a report with their findings to help you make an informed decision. Unexpected repairs may be a costly mistake, so do your due diligence and decide whether you will need a property inspection.

REO properties are purchased AS-IS condition.

The buyer is responsible for most repairs that may be necessary with the property, and this is why it is important to have a property inspector perform an inspection of the home. Most issues a home has are curable, but to what extent and at what cost. Decide how much you are willing to spend or the work you can do your self, if the property does indeed need repairs. Not all REO properties need repairs, and if you are unwilling to put improvements into the home or do the work yourself, you may want to only look at properties that can be moved into as is. However some of the best bargains on REO homes are those that need some TLC, but it is ultimately up to you.

Know when to hold em’ and when fold em’!

One of the greatest things about buying an REO is the lack of emotion in the transaction. The bank as the seller has no emotional attachment to the property, unlike an owner/family that has owned the property for 20 years, with many memories. It is hard to not get emotionally wrapped up in the purchase, especially when purchasing a vacation home. Know when to walk away; keeping a straight head and thinking of the financial commitment of purchasing a home. Be aware of the cost, location, and if the property needs repairs. Consider the total cost and time that will be needed to make the property a home for you and your family.

Close the transaction with confidence!

Closing an REO transaction is a very exciting time, but make sure that all the T’s are crossed and I’s are dotted before you close. Have you completed your inspections, has your loan been approved and have loan docs been ordered? Have you reviewed and confirmed the closing statement? Do you have a list of local utility companies? If the home will need repairs and improvements, have you contacted contractors to perform the work? Once the paperwork is completed and escrow closed, you will be the proud new owner of your new home… keys in hand.

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About Deanna

Deanna is an experienced "LOCAL" REO Listing Agent providing foreclosure services in primarily the resort areas of Mammoth Lakes, Crowley Lake, June Lake, Bishop, and Big Pine, CA. Successfully closing over $40 million in REO Real Estate transactions and sales since 2005, Deanna provides professional and prompt REO Real Estate services. Click here to view my Featured Properties.

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