There is an post on the San Fernando Valley blog concerning Pricing REO Property. As you would expect given the title, the entry provides advice to a listing agent.
I added a comment that discuss being an REO buyer. Take a look. Post comments or questions here if you need more information.
Picking up where I left off on the other blog…
Over the years I have purchased REOs in CA and OH. All Single Family Residences (SFR) which were held as rentals.
Some REOs will be priced at the full market value and others are a diamond in the rough. Some lenders need to clear the books quickly and will deal. Others just sit and wait a bit.
Never expect a lender who is selling to respond quickly to any offer. They have other business to attend to. There might be a committee that needs to meet to review offers. It actually does not matter. Just factor in a slow process. If it goes quickly so much the better.
For any REO remember DYOR – Do Your Own Research. The title should be clean but the condition of the property is suspect. Any house that has been vacant for a long time can have hidden surprises. You might find animals or other pests have moved in. There likely will be no power so bring a flashlight plus expect to have issues if you want to test appliances. Many times the appliances have already been claimed by someone else.
There can be an issue with financing if the property has structural damage. A kitchen without a working sink, no toilets in the bathrooms or something more serious is all it takes. You might qualify for a mortgage but the property will not. Hard money or construction financing (or cash from other sources) can be the only way to get the deal done. We can discuss financing at a later date if there is interest.