May 8th, 2013 By H&H Real Estate Media in Blogs.
Wrapping up “finding and buying distressed property.” This final installment will put it all together. Once you have found your REO or other distressed property and decided if the property will be financable (if not paying cash), the last thing to do is make an offer on the property. Contrary to popular belief – most – in not all – REO properties are listed by servicers (especially if the property was owned previously by an investor). Servicers will typically have a guideline (based on private investor approval) which tells them just how much they can take on a particular property. Normally that number is less than 10% of the asking price and this is typically within a 30 day window. All REO’s are listed on the market AFTER the servicer or bank has ordered either a BPO (broker’s price opinion) or an actual appraisal to determine its 30 day price and 180 day price. So when properties that are REO are listed the amount asked is based on these opinions of value. This also means that “acceptable” offers are also based on these opinions. There are of course the onesy twosy ones that will sell well below asking, but those are very few and far between. Most REO’s find a list price around 20% below normal market value. Some higher some lower.
When making an offer the offering should be clear and concise and without a lot of the seller will do this or the seller will do that. If you want to the seller to pay something..ask for that in an amount NOT in a line item. For example — do not ask the bank to pay for a termite inspection, but include the dollar amount (say $75.00) in the amount you want the bank to pay. The banks only care about the bottom line NET. That is all the investors are looking for as well. So if you want to offer $105,000 for the REO AND want the seller to pay all the closing costs (to the tune of 5% of the contract price) ask that the seller pay $5250 in closing costs.
If your offers fall within the guidelines, are written clearly without vagueness or confusion, written on As-Is contracts with specific amounts your offers will go much smoother.
Of course ALWAYS try your best to use a Realtor® who is familiar with writing REO offers when looking for property because there is nothing worse than being blindsided by missing part of the process!!! Let me know if you have any questions!
Next week — short sales! Oh yeah.