So, I know that when you are placing an offer on regular houses that is FSBO or listed through the MSL that you add some contingencies to protect yourself. Contingencies for inspection and financing are common.
What about REO properties? I haven't bought anything yet so the subject is still a little cloudy for me. It honestly feels like a dumb questions since a lot (if not all) REOs are sold in "as is" condition. I just don't want to be the dumb person not to ask.
Thanks for the advice!
Hi @Dakoda Spencer ,
Each bank is a little different so there isn't a hard and fast answer to it. I even know one that has it's own P&S contract they want used. Most have some form of disclaimer though (Not related to anyone at the bank\are you buying as an LLC etc). You can still put inspection on many of them, but it does play into your offers strength. To generalize: A bank has no feelings and just wants to find the offer that will net them the most money and has the best chance of closing. I usually recommend to make an offer that you will pretty much accept even if unforeseen things are there (go low and if it flies it is a grab bag, if not go for the next one). With an inspection you are really paying someone $400 to tell you if you should walk away or not (the bank is not going to fix anything or renegotiate). Value of land is sometimes the price an investor chooses (forget the building, I'll risk tearing it down).
Hey @Mike Cumbie ,
Thank you so much for the fast response. That clears up a lot for me. I have a particular interest in REO's so this is great to know.
You mentioned that "Value of land is sometimes the price an investor chooses". How does that play into creative financing? Can I still use a HML if I plan on building a new house in place of the old one? I think my main concern is that I can't find the right contractors to have it build in a timely manner. Are there other creative financing available (beside private money) that I can use for purchasing an REO, tearing down the old house, and rebuilding then selling a new house? What is your opinion on this?
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