Who is usually involved in REO negotiation?
I really need an overview of the sort of procedure for approaching a bank or lender/owner with an offer to purchase.
I can find some property with an online listings service- is it necessary for a real estate agent to be involved? What are the differences in procedure between this type of real estate sale and the tradtional?
With REO the property was acquired by the lender through a foreclosure auction (most probably no bidders or a failure to sell above the reserve). The original owner is totally out of the picture. Its you, your agent, the lender/owner and his agent. Bank owned property falls into this category. Expect the bank and most lenders to list with local real estate agents, or management companies, who then do an appraisal for the owner and multilist the property. So these properties are marketed by traditional methods, and online listings service providers pick up from these MLS. An experienced investor can get to negotiate directly with some REO’s, especially if he/she follows up on the property immediately after the auction.
There are some important differences
The property will be sold “as is” or “as disclosed” most of the time. You can’t rely on the marketing appraisal report and state disclosure laws won’t help, as the owner is most likely exempt- (reason=has never lived in the property.)
There will be no contingencies allowed in the contract, such as a “subject to sale of another house,” although you may get away with an inspection contingency.
Sometimes a minimum deposit will have already been stipulated.
Banks will give “clear title” which is a great advantage over other foreclosure properties.
When you submit your offer you will need to attach a preapproval letter(not a prequal) along with verification of funds available.
Lastly, don’t expect the negotiation process to be swift. My experience is that I can wait 2 to 3 weeks before a bank department gets back to me as promised.
I am no longer a real estate agent, long retired, although I still like to invest; buy, develop a little, flip.
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