REO deals when you are buying

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.

Advertisements

2 Responses to “REO deals when you are buying”

  1. Foreclosure overview « Real estate investing advice Says:

    […] Real estate investing advice Practical real estate advice from the trenches. « REO deals when you are buying […]

  2. LONNIE Says:

    Lonnie wrote:

    Hey John,

    Had a question regarding REO’s…Does the lender let you know if there are other offers in besides yours, and if they are higher? As a bidder are you privy to such information?

    Thanks,

    Lonnie

    John Corey replied:

    Assuming that the bank is like any other seller. They have the property listed in most cases. They will not talk about other bids. This is not an auction. If there are other bids then expect a counter if you are low. Not guaranteed. Also expect that the bank is slow to respond. They might have a weekly meeting to discuss offers so it can be a rather slow process even when there are no other bids.

    At some level just forget what the others want to pay. Pay what makes sense to you and if you get outbid then potentially that is a good thing. It will tie up the other bidder so they are not bidding on the next deal.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: