This may be the door to your REO-purchased home.
It’s usually much faster to purchase an REO (lender-owned) property than a short sale property. That’s because banks and mortgage companies have already taken the property back in the foreclosure process and make all decisions in the sale with no intermediaries. Typically, the lender has already had two BPOs (broker price opinions) completed and a formal appraisal, so they are well aware of the property’s proper pricing and condition and can be prepared for for a fast sale.
Tips For A Smooth REO Home Purchase:
- Submit complete offers. Offers should be submitted with all signatures, a copy of the earnest money check, homebuyer’s pre-approval or proof of funds for downpayment amount or if a cash offer, As-Is Addendum and any special addendums required by the particular lender (ask selling agent).
- Pay home warranty. The lender will not pay for a home warranty, so that should never be included in the purchase offer, as lender will automatically counter.
- Use lender title company. Once acquiring property, title is opened — way before it is put on the market for sale. This allows the lender to have title company be certain all title issues are clear. As their title company has already done a lot of research on the property beforehand, lender will require you use their company.
- Get pre-approval by lender title company. Certain lenders require that you get loan pre-approval through their company (such as Bank of America) as part of the sale. The homebuyer does not have to use their lending services to acquire purchase funding, but incentives such as a free credit report are provided if their services are used.
- Do not make low offers. Low offers will be outright rejected by the lender. Remember, they have done their research and know the worth of the property. Don’t insult the lender, as a counter will not be given. Instead, give a reasonable offer so that if it’s not accepted, at least lender will counter it and give the homebuyer another chance.
- Use certified funds. Although a copy of a personal check can by submitted with contract offer, only certified funds can be used to open escrow once your offer is approved.
- Verify all information. Although the property is sold “as is” and no repairs will be made, homebuyers should still complete a home inspection upon contract approval, check on clear title and any outstanding bills, review possible HOA liens and HOA CC&Rs and bylaws, and any other issues pertinent to the sale.
- Close on time. Per diem amounts, which the lender writes into an addendum, will be charged if closing is delayed that can range from $100 to $150 a day.
Use these tips to increase the chance that the REO home purchase process encounters smooth sailing. Be aware, however, that the lender is a corporation and will think and act accordingly to maximize their profit as the seller.
Photo Credit: Steve 2.0 via Creative Commons 2.0
The Gov. should pass a law to make the big Banks short sale the house to the home owner thats been in the house for YEARS, and has been paying for it for 12 or so forth years and if I were to go into foreclosure/short sale, the bank sells the house to some stranger that comes along and buys it for the price its worth today!!!! we wouldnt be in this boat today! NOT FAIR!!!
The Gov. should pass a law for the people that the big banks have to short sale the house to the person that has had the home for years and has been paying for it rather than short sale the house to a stranger!! this is not fair to the little guy! something has to be done!