REO properties. How do i start?

7 Replies

ok. So I'm a total Newb. Just signed up a week ago. A lot of places near my initial investment property are owned by banks. Can anyone help me with questions on the best way to pick up these properties and start my monopoly approach on Baltic Ave? 

@Patrick Coleman   Welcome to BP Patrick!

Typically the REO's will be listed by a realtor and you would make the offer through the realtor. Generally the bank won't accept offers directly as they want maximum exposure and offers by listing it on the MLS.

If it's not listed yet, they could be doing due diligence still, such as determining the listing price, winterizing the property etc.

Good luck!

- Tom

Thanks Tom! I'm looking at a property that has gone through an auction and has not been picked up by anyone so the bank bought it out at 3k. The MLS has it at 22k. I am working on seeing it. If it's worth it, how do i negotiate knowing the purchase price and the land and dwelling value given by the county? I mean i can talk a used car salesman down but isn't it beneficial for the bank to let it go for less?

Originally posted by @Patrick Coleman :

Thanks Tom! I'm looking at a property that has gone through an auction and has not been picked up by anyone so the bank bought it out at 3k. The MLS has it at 22k. I am working on seeing it. If it's worth it, how do i negotiate knowing the purchase price and the land and dwelling value given by the county? I mean i can talk a used car salesman down but isn't it beneficial for the bank to let it go for less?

There are a lot of great resources on here about bidding on REO properties. I think the number i've seen people land on is 90% of the price with all costs included such as closing. You can get them to go in 3% on closing, but if that takes you to 87% they wont accept the offer. Every bank has a different number. I think generally with REO's they will counter twice from what I have read and that second counter is generally their minimum acceptable offer. They could also get the first bid and hits the number they owe and go to close. All you can really do is keep putting offers out there. Don't get hung up on one deal, you should offer on 100, get 10 bites close on one.

@Patrick Coleman   You're best bet is to make an offer and see what they come back with. 

As a side note, are you comfortable with a $22k property?  I'm right over here in Vermont, and I've only seen a few <$25k properties come on the market over the years, and they needed so much work it wasn't worth it.

@Tom S. definitely has it right on value. Under $20k is probably something that's only good for the lot. But you never know.

I am helping a buyer get a foreclosure that was listed at $43,500 and we are getting it for $31k. Not bad. We countered back and forther with the bank about 7 times to get there. It's a bank. They want their money. They also want to sell it. Play hardball. But.. find a realtor to help if it's on the MLS. No reason not to!

What Tom S. Said. If there is a home that the bank hasn’t listed yet you still cannot offer till with an agent

Some good advise so far. Another small piece. Don’t get hung up on what the bank paid for it. They typically pay up to what they have loaned on it but will pay less if no one else bids on it. It might have had some title or legal issues on it that scared off earlier potential buyers.

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