BiggerPockets

They become cheap when you start negotiating with the banks for a good deal.

Second banks are wanting to get as much as anyone else so dont they want them to go to MLS

Ok what is a BPO?

Secondly what I have found is that reo<s are hitting the market at slightly lower than market value to higher than market value. Yesterday I trudged through a blizard to look at a REO priced at 95000 and it is worth around 59000. That is a worst case but you get my point. So How can I expect to get a nice deal this way?

A BPO is a "Broker Price Opinion". When a property becomes REO, the lender/asset manager gets a BPO from the agent listing the property. This BPO typically becomes the listed asking price for the property on the MLS.

To answer your question, the majority of REO's are overpriced. The really good deals are bought either before they are listed, immediately after they are listed, or after the property has been on the market for a long time (120+ days) and the price has been reduced several times.

I looked at a property 2 weeks ago that was listed at $19,900 and had an as-is value of around $45-50K. This was a result of a BPO that was way below what it should have been. Lo and behold, the property had (no joke) 17 offers on it in 24 hours.

If you can't get 'em before they hit the MLS, you gotta negotiate hard to get a great deal. I bought an REO in December '08 for $60K that was first listed for $95K. But you have to know your numbers ahead of time before you start making offers. A property isn't necessarily a great deal because you bought it for xx percentage below asking price- it's a great deal because the numbers say it is.

Getting to view REO's before they are listed is easy.

The company I work for has what we call a pre-list of REO's. It's a list of properties we are contracted to list for any one of the 18 banks we work with, that we are in the process of cleaning, re-keying and doing BPO's.

I have several investors that I have given this too and have made several offers before the property is listed. The problem is we have no idea of the number the bank is actually going to list the property at, when the property is going to get listed (2 days, 2 months...) and they almost NEVER entertain an offer before the property is listed. You can spend a lot of time spinning your wheels with a pre-list and end up with nothing more than frustration.

My best suggestion is to get a broker who knows what they are doing. A broker that can weed through all the new REO listings and send you the ones that are the deals. Then get a system together that allows you to react quickly to new listings.

Reacting quickly means getting the property from the broker, reviewing property for a construction budget, work with the broker to come up with an ARV (after repair value) and make an offer. All with-in 24 hours of the property being listed.

If you can't do this your going to have a tuff time competing for the deals as there are several others that can.

You can buy listed REO's for great prices. There's no magic. Just start making offers.

read my posts as well. Around here, MLS listed REO's are getting multiple offers with bidding wars mostly from owner occupants who are willing to pay full retail. As an investor, paying full retial is not a good deal and therefore, buying from the MLS is a losing effort in most cases here (So Cal).

What the Bank is asking for a REO does not mean you will go and pay that amount. Do your numbers and offer what you think is worth to you. REO's are good for me because my offers don't offend a family/owner...it goes to Bank officials who only care about their numbers...no sentimental attachments... I never...ever pay asking price.

If you want to find REOs before they hit the MLS, get with an agent who specializes in REOs and has a lot of inventory. Chances are that they are getting inventory daily from the bank, and then there is a period of due dillegence performed by the agent on the bank's behalf. This usually included occupancy check, BPOs, repairs, maint. and other premarketing activities.

People come to me all of the time and want to skip the agent, but we won't do that. We have too many homes spread out all over the US to understand each market as well as a local agent. So even if we get offers in premarketing, there is still about 10-14 days of due dillegence that the bank will do before accepting an offer. I speak for my company which is a large servicer for several banks, nation wide.