Guidelines for REO Offers and Escrows

These informational guidelines are for the REO purchasing process. They are not intended to be a binding agreement of any kind. The information contained herein is designed to create an informed Selling Agent and (potential) Buyer and reduce stress and ill feelings on all parties in the transaction including Buyer, Agents, and Asset Managers.

REO GuidelinesReality of submitting offers on REO properties.

While we are legally obligated to submit all offers until there is an acceptance of one (no back-ups), selling agents who present very low offers (compared to asking prices) within the first 30 days of the listing or who make offers with very short escrow periods (not mechanically possible with REO properties) are in all likelihood wasting their (and their buyer’s) time.

Submitting REO offers to get accepted.

REO (Real Estate Owned) Departments and Asset Managers require that all offers be submitted on their “Offer Worksheet” or their online equivalent. This is aimed at simplifying the process for the Asset Manager who is likely to have a large number of assets under management and often in multiple states with vastly different forms. These Worksheets contain the basics only––price, terms, concessions, closing dates, etc. Upon acceptance of any REO offer all of the documents are sent by mail to the Seller/Asset Manager. All offers must be presented with evidence of earnest money deposit and mortgage/loan pre-approval from lender. All cash offers MUST be accompanied by proof of funds. Do not submit offers contingent upon the sale of another property, promissory notes, buyer making multiple offers, etc. Do not include with the offer the additional disclosures or other company forms (that will be handled later).

How long before the Selling Agent and (potential) Buyer hear back on the REO offer?

Timing varies depending on the institution, the time of the month the REO offer is submitted (month’s end typically taking longer), the Asset Manager’s file load, etc. Often the institutional seller is in a different time zone that can create delays in response times. Additionally, the more complex the offer, conditions, etc., the more likely that approvals or responses have to come from “management”, thus delaying response times. The Listing Agent is waiting too and will forward responses and information as soon as it becomes available. Selling Agents and Buyers must exercise some patience in these transactions. Asset Managers can have an enormous number of assets/files under management and will not respond to multiple and/or daily inquiries, in fact, those inquiries will slow the process down for everyone involved. Please be considerate––all parties are working towards the common goal of closing on the subject property. If the Selling Agent does not hear from the Listing Agent it is because there is no update or new information to pass along.

Dealing with Counter Offers.

Since all offers are submitted in a “Worksheet” format, all counter offers are submitted in the same format. Please be prepared for that. Once an offer/counter-offer has been accepted, the entire “package” is sent to the REO Department for signatures. The “package” will include all agreement related documents.

Please read the next three paragraphs carefully.

Seller’s Counter Offer Has No Signatures. Yes, they do not . These forms are generated by the lender/owner’s REO Manager or the outsourced Asset Management company (and often come to the Listing Agent as an email attachment). Once an agreement is in place the file is then given to corporate management for signatures.

Buyer’s Lender. **Please forward these preliminary documents to the Lender ASAP. (unless cash transaction) so they can begin the loan process**. Seller signatures can take time to receive. Start the loan process as soon as possible. Most agreements provide the Asset Managers to charge “per diems” if the loan is not funded by the agreed closing date.

Verbal Agreement. Once the Selling Agent is informed that the Buyer’s offer has been accepted, IT IS (acceptance may be accompanied by the previously mentioned Worksheet). REO Departments and Asset Managers give the “okay” and then go to their superiors for signatures. (There is a minute chance an offer/counter-offer can be “un-accepted” at this point, but that has not been the case at this point.)

Time Frames for REO Offers and EscrowsTypical time frames for REO offers and escrows.

Offers and agreements should be negotiated to a date-specific (calendar) closing date. This is generally in the 30 to 45 days from the “mutual acceptance” time period. These dates can be missed due to many circumstances that the Buyer cannot control. Due to Title issues, REO Department delays, etc., even cash purchases are difficult to close in less than 30 days. The Asset Managers are not in position to work against the Buyer or their Agent. Asset Managers know that appraisals, inspections and the loan process takes time. They will assume (since the Buyer is “pre-approved”) that the loan process will be expedited by the Buyer. They do not expect trivial delays. Be sure to read the Bank Addenda carefully because there are often per diem late fees for late closings due to the fault of the Buyer. The Institutional Seller will not suffer delays or expenses due to the Buyer’s Lender not performing in a timely manner. Buyers need to perform their inspections as soon as practicable after notified of acceptance. In some cases the Buyer and /or their inspectors may be responsible for de-winterizing and re-winterizing the properties.

Title Company and Escrow Services in the REO transaction.

Like it or not, the REO Company chooses. Period. Unfortunately, The Listing Agent has no say in it either––we all have our favorite companies and officers to work with. They get to choose because of the significant volume of title and escrow work completed in the foreclosure process. Title and escrow contact information comes with the signed documents from the seller (i.e. most likely delayed). In all likelihood the Listing Agent WILL NOT have this information prior to receiving this document package. The Listing Agent will confirm this information with the Selling Agent when it becomes available. Continued inquiries will only delay the process for everyone involved. Please be considerate, everyone is working towards the common goal of closing on the subject property.

Scheduling property inspections and dealing with utilities at the REO property.

It is absolutely essential that Selling Agents give 3 BUSINESS DAYS NOTICE PRIOR to scheduling an inspection. Some utilities (such as electricity) will likely be on prior to making an offer, others will not (such as the water if the property is winterized). The Listing Agent has no control over the work schedules of the utility companies and will not be responsible for re-inspections and/or associated fees. It is probably a good idea to visit the property prior to the inspection.

Condition of the REO property.

Banks sell property Assets in AS-IS, WHERE-IS Condition. As a rule ONLY certain instances will the Bank consider repairs. Asset Managers typically have limits on concessions they are allowed to give on each file. Generally these repairs will not be authorized to-be-completed prior to closing.

Some Asset Managers require all original signed documents. Please be prepared to overnight all original documents and addendums with the accepted offer.

For additional information on purchasing REO properties in Mammoth Lakes and the surrounding communities in Inyo and Mono Counties please contact Deanna Lantieri, RE/MAX of Mammoth REO Department Listing Agent.

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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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