Involved In Real Estate · Boonton, NJ · Member since 2008 · 39 posts · 15 votes
15y
I know this is an old post, but it does bring up some good points for investors who haven't seen this.
This is a blog I posted a few months back:
Investors are constantly asking me 'Why can't I get my offers accepted by the banks?'. So many investors are making multiple offers on REO properties, and aren't closing on any REO's. The answer is simple: banks are pricing the properties to sell. They are getting close to, if not more, than asking price in almost ALL cases. In order to get your offer accepted by the bank, you need to come quick and come high. In many cases, offer's $20,000 below list won't even get you a counter offer. Sure, in some markets, it is a good start if you and the seller are willing to meet in the middle. But in the inner city areas, multi family properties are stripped of the plumbing, need to be 203k or cash only, and are priced below $50,000. Cash investors are pouncing on these income producers, resulting in multiple offer situations and prompting the bank to request highest and best from all parties, sometimes up to 20 offers the first week, depending on the area, but regardless of the condition.
It's always a good idea to look at the days on market of the REO property. If it's been sitting for a month or so, check to see if it has been reduced. The banks will almost always reduce list prices monthly until a sale is procured. But hold out too long, and you'll miss it. Best bet: Come quick and come high. Offer too low, and you're spinnin' wheels. Yours and your agent's.
Regarding inspections/utilities: You are entitled to inspections if it is written in the contract. If it's not, have your attorney put it in in attorney review. The bank can accept or reject, but they WILL NOT put the utilities on if they are not already on. Every bank is requiring their broker to put the utilities on in their name, if they are safe to be on. If they are not safe, they will not be put on for inspections.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
15y
That is a rare case and kudos to that agent. It is refreshing to see an agent actually do their job.
@Steve - Same here in CA. Sellers of REO's (banks) provide the seller disclosure forms blank and their addendums take precedence over the PSA. In these addendums, there is a specific "As-Is" clause.
Investor · Reston, VA · Member since 2011 · 683 posts · 191 votes
15y
J. Scott,
There could be an issue if a seller has actual knowledge of a material defect and doesn't disclose. Depends on case law. I'd guess the bank erred on the side of caution.
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
15y
Originally posted by Will Barnard:
After reading the responses here, I have determined that many have different perceptions and experiences when dealing in REo deals.
Some think banks rarely deal direct with a seller, especialy if you are buying one at a time. This is simply not true, but again, anyone is entitled to post their opinion. ...
From my reading of this excerpt in context, my guess is that Will intended to say buyer in place of that bold text seller - Will, feel free to correct me / update the post ...
I say that because the bank is usually the REO seller ...
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
15y
Thanks Steve, you were correct. I updated my post then realized I updated the wrong post, so had to update again.
Can you say mistake city today!!
I should quit now before i bring down the house.