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Tips on Buying an REO Property
Listed below are our TOP FIVE foreclosure buying tips.
Tip #1
PATIENCE! More often than not, REO properties are managed by asset managers who are responsible for large portfolios (sometimes hundreds) of other properties, and things sometimes move a little more slowly than buying from an individual. It's simply a volume issue and the steps involved just take a little time.
Tip#2
PRICE! The seller understands market value - probably better than you do. They don't "give away" their properties just to "get them off their books." REO departments with lending institutions are very much in the real estate business. They typically have a Competitive Market Analysis or Broker Price Opinion from at least one, sometimes two or three professional real estate agents, AND an appraisal from a licensed appraiser. They know what the property is worth and expect to sell it for fair market value. Many people try to find out how much was owed against the property prior to foreclosure - and the reality is, it doesn't matter. A company isn't going to sell a $100,000 property for $70,000. Would you give away $30,000 for no reason? Neither do they...
Tip#3
CONDITION! You should take care to understand the condition of the property. In Texas, seller disclosures aren't required on foreclosure properties. Almost all REO sellers will have a clause or addendum that provides for an inspection period at no cost to the buyer. By the way, the seller understands this also. If the property needs repairs, the seller already knows. They've been informed via the Broker Price Opinion and Appraisal about the condition and probably have photos of all damage on file. Most of the time, the properties are priced accordingly, so don't expect big discounts below their list price for repairs - they've already been accounted for.
Tip#4
AGENT! Use an experienced agent. Whether you take advantage of our in-house resources or not, you should make sure you're dealing with an agent that has experience with foreclosures. Different agents have different specialties, skills, and experiences in the real estate market. Working through the process of buying a foreclosure requires some familiarity with dealing with banks, special addendums and/or amendments to the standard Texas contract, and completing the required documentation correctly and completely.
Tip#5
FINANCING! Most REO sellers will not even review your offer without a lender's prequalification letter, or if your paying cash, some type of proof of funds. They're not about to allow you to tie up their property with a contract, without first verifying that you're a qualified buyer with the means to close. It can also be a good idea to consider the lender that owns the property for your loan. They like that!
Listed below are our TOP FIVE foreclosure buying tips.
Tip #1
PATIENCE! More often than not, REO properties are managed by asset managers who are responsible for large portfolios (sometimes hundreds) of other properties, and things sometimes move a little more slowly than buying from an individual. It's simply a volume issue and the steps involved just take a little time.
Tip#2
PRICE! The seller understands market value - probably better than you do. They don't "give away" their properties just to "get them off their books." REO departments with lending institutions are very much in the real estate business. They typically have a Competitive Market Analysis or Broker Price Opinion from at least one, sometimes two or three professional real estate agents, AND an appraisal from a licensed appraiser. They know what the property is worth and expect to sell it for fair market value. Many people try to find out how much was owed against the property prior to foreclosure - and the reality is, it doesn't matter. A company isn't going to sell a $100,000 property for $70,000. Would you give away $30,000 for no reason? Neither do they...
Tip#3
CONDITION! You should take care to understand the condition of the property. In Texas, seller disclosures aren't required on foreclosure properties. Almost all REO sellers will have a clause or addendum that provides for an inspection period at no cost to the buyer. By the way, the seller understands this also. If the property needs repairs, the seller already knows. They've been informed via the Broker Price Opinion and Appraisal about the condition and probably have photos of all damage on file. Most of the time, the properties are priced accordingly, so don't expect big discounts below their list price for repairs - they've already been accounted for.
Tip#4
AGENT! Use an experienced agent. Whether you take advantage of our in-house resources or not, you should make sure you're dealing with an agent that has experience with foreclosures. Different agents have different specialties, skills, and experiences in the real estate market. Working through the process of buying a foreclosure requires some familiarity with dealing with banks, special addendums and/or amendments to the standard Texas contract, and completing the required documentation correctly and completely.
Tip#5
FINANCING! Most REO sellers will not even review your offer without a lender's prequalification letter, or if your paying cash, some type of proof of funds. They're not about to allow you to tie up their property with a contract, without first verifying that you're a qualified buyer with the means to close. It can also be a good idea to consider the lender that owns the property for your loan. They like that!
Sellstate Metro Realty
Your Perfect Real Estate Solution | 972.499.6900
Sellstate Metro Realty
Bus: 972-499-6900 | Fax: 972-499-6800
Office: 1651 North Collins Blvd. Suite 100 Richardson TX 75080
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