Looking to BUY Bank Owned Foreclosure/REO Homes?
I have been working with REO Properties for over 8 years now, and here are some of the handy little tips I have come up with to help you succeed:
1. Join EVERY Local Investor group you can find! They are usually $150+ a year to join, and are a great way to get to some amazing "deals"! They usually know the best REO Realtors in town!
2. Find a REALTOR that specializes in REO's! (This is one of the most important tips here folks! We Realtors have a wealth of knowledge when it comes to buying foreclosures...if they ONLY sell 500k homes you are most likely barking up the wrong Realtor)
3. Know your banks! Find out which bank is selling the home you are interested in. They all have slightly different game plans! (For example, Freddie Mac is very specific about timing on offers. They list from 2 comparable BPOs from 2 Realtors and they HOLD that price or $1,000 or so off for the first month. PERIOD. Do not expect to get them 20k off the offer in the first 30 days. Other banks are different. Your Realtor should be able to let you in on these secrets!)
4. Multiple offers...AKA "Highest and Best" Means JUST THAT!!! Do NOT play around and expect to offer low and then negotiate! You need to offer your HIGHEST and BEST here! Also, make the number uneven...like $61,345 just in case someone else offers $61,000...YOU WIN!
5. Make LOTS of offers! It is ok to offer a little lower, as long as you are spreading it out! Make 20+ offers a month to insure that you are getting 1-2 of them to accept the offers! If you are looking to get 3-4 homes a month, you need to be making 50+ offers. So find a VERY patient Realtor :)
6. Look for 3 Bedroom, 2 Bath Homes in Good Turnaround Neighborhoods! If you are looking for rental properties...tell your Realtor to pick rentals out. If you are looking to "flip" houses, make sure to tell the Realtor you want "resale properties".
7. Now is the best time to buy homes for OWNER FINANCE! These banks are unloading REOs like hot cakes, and with the financing climate...you can owner finance these all day long. Go to the investor meetings I spoke of in number 1 and aks those investors for a copy of their owner finance contract. With the changing financing..YOU BE THE BANK!
8. Check out HUD properties! Go to www.hmbireo.com and look up properties in your area. You can find a Realtor directly from the website in your area and have them write up your offer. They already inspect the homes and publish the inspection list right there with the photos! GREAT way to get a good deal!
9. Be ABLE to pay CASH! Either find some money or get a hard money lender. The banks like to see CASH OFFERS! It makes them actually smile...which is almost impossible!
10. Beware! Make sure you understand that REOs are AS-IS, WHERE IS and you have to VERIFY ALL Info!
With that...I wish you luck :)
Hi Tracey
Would all of your advice hold still if the seller/bank was asking for a purchase sale contract signed in place of an offer document? We see many of these today, and of course, if the buyer were to submit this sort fo contract for every offer, they could end up losing quite a bit of money or being obligated to buy 6 houses all at once, even though they really cant afford to buy that many...
Just wondering how you would handle that sort of scenario...