Newbie seeks advice on buying an REO
MD · Member since 2008 · 34 posts · 0 votes
I need a little help with the REO Process. I've learned about a home that has been bought back by the bank. It's my understanding that there is a 90 day waiting period where the homeowner has the opportunity to buy the house back and that a contract can not be accepted until that time has passed. We know what the bank will be listing the house for and are prepared to pay the full price without contingencies and have already sent in a contract for the home. Should I be expecting the trustees to hold our offer to see if there is someone willing to pay more? I don't know if there's anything else we should be doing to increase our chances of getting the house.
If you know what bank owns the house, you can try contacting them directly, and see if they will sell you the house directly.
You can contact the previous owners and buy their right to redeem from them. You'll still have to pay the bank the redemption amount, typically the auction amount plus their costs. So, you don't want to pay the owner too much for this right. But, if the auction price is something you can live with, and you can get the owner to sell you the redemption rights, this may be the most direct way to acquire the property.
Be sure there is still an actual redemption right. You should speak to a knowledgeable RE attorney before paying the owner anything.
You can contact the previous owners and buy their right to redeem from them. You'll still have to pay the bank the redemption amount, typically the auction amount plus their costs. So, you don't want to pay the owner too much for this right. But, if the auction price is something you can live with, and you can get the owner to sell you the redemption rights, this may be the most direct way to acquire the property.
Be sure there is still an actual redemption right. You should speak to a knowledgeable RE attorney before paying the owner anything.
Thank you for the help. We know who the bank is, but they have a law firm handling the home. We have been in touch with that law firm and they are the ones who have our contract. Should we be contacting the bank as well? Also, how can I find out what the bank bought the property back for?
The winning auction bid may be public records. The details of the foreclosure varies a lot from state to state, so its hard to give you specific advice.
Go to the court house of the county where the house is located. Find the clerk/recorders office. Tell them you want to find out about the house and that it was recently sold at auction. They may be able to help you. Almost certainly, they can at least tell you who owned it before the auction.
In some places, counties have this information online. Google for the county name and recorder or clerk and start poking around. I'll warn you, these county recorder web sites can be pretty obtuse. Hopefully, you'll be lucky, they have a web site, and you can enter the address and find all the details. If not, pay them a visit.
The lawyer may be able to give you that info, if you ask.
Here's where I am at now. It turns out the house went to auction and no one showed up. My realtor chalks it up to being a rainy day and they had a very high min. bid.
The redemption period is set to expire this week and the property will be listed with another realtor.
We tried to circumvent the usual process of the house being listed through an REO broker, but we were shut down.
Can anyone tell me about dealing with PAS? The listing realtor says the property has to be listed for 5 days before she can submit any offers. Is this true?
Because I'm interested in this house for myself and it's not a flip, I'm planning to offer more than the asking price and I have cash ready. The offer is contingency free. I was going to submit my offer the day the house was listed, but if there's a 5 day waiting period, then I guess I should hold it until day 5. I don't want the realtor shopping my offer.
I don't know anything about the 5 day period before you can submit offers but if that is indeed true, why not try forming a good relationship with the realtor and submit the offer now. If the realtor wants to work with you she'll submit the offer as soon as she can. I wouldn't worry about the offer being shopped because if she's gonna do that, she's not gonna work with you either way!
I think that most of the offers the realtor will take will be, at or below what the bank is asking. The realtor will give them all to the bank at the same time and then the bank will accept the highest one that meets their guidelines. If you have a realtor that you work with you might as well have them work for you on this. When you're dealing with banks it can kinda get screwy and having someone go to bat for you is a good thing.
I'm assuming, REO holders prefer offers with zero contingencies.
Do you think its ok to waive the 'structural' contingency if you've seen the house and is in good shape?
Which offer will they pick from below for a bay area house in good condition listed at 400K?
1. 390K, 2 contingencies, structural and mortgage
2. 380K, 1 structural contingency
3. 370K, Zero contingencies
Do you think its ok to waive the 'structural' contingency if you've seen the house and is in good shape?
That depends on the risk you want to take. If you have confidence in your abilities of determining things that may be "wrong" and you feel you can fix them on your own, then why not?
1. 390K, 2 contingencies, structural and mortgage
2. 380K, 1 structural contingency
3. 370K, Zero contingencies
Not from the bay area, but I think if one were available they'd take: 390k, Zero contingencies.
Otherwise, I don't think it's really possible to tell unless you know them personally, maybe the one in the middle just because it's in the middle of the road..?
Which offer will they pick from below for a bay area house in good condition listed at 400K?
1. 390K, 2 contingencies, structural and mortgage
2. 380K, 1 structural contingency
3. 370K, Zero contingencies
Option #3 seems like the obvious choice, but there are behind the scene numbers that only the bank will see. $20K in additional losses might make this deal a no go according to the investor who owns the REO. There are thresholds that every bank has for accepting offers. This is where a lot of agents/buyers get fustrated with banks and the REO process. They don't understand the bank's logic when they won't accept their offer that is $20K less, then 3 months later it is still on the market and the bank has lowered the list price by $20K. This is the bank's gamble to try to meet their criteria, for example, Lets say the market conditions are stable, and marketing times are 30-90 days according to the agents BPO, or an appraisal, the bank might be inclined to accept offer #1 with a 30 day close and keep the other 2 offers as back ups. It the offer doesn't close in 30 days, the bank will go back to the other two offers and see if they are still around, or lower the list price.
As for the 5 day period before an offer can be accepted...I have never heard of this and it doesn't make sense, but I guess anything is possible. Different banks might have different rules. I would contact the agent via your agent and make the offer anyways. They should keep your offer until the 5 day cooling off period subsides and then accept if it is more than the list price.
i think the 5 day period eveyon ekeep looking over is the minimum listing period. every one of my asset managers has a minimum time the property must be listed in the mls before the will look at any offers.
However, any agent with substance will walk the offer in prior the minimum period ending and have it waiting to be submitted. I accept offers on all my properties prior to he sign going up. Most times agents are submitting offers based on the BPO price. I also send out a weekly list of our REO prior to contract.
None the less, that offer should be in that agents hands asap.