How long is REO acceptance good for?

Question

Lets say i make an offer with a POF/LOI to the holder of a property (bank). I will also be using transactional funding to double close as I havent found a title company in SD to do simultaneous closings anyway... Lets say i get an offer accepted by the bank. How long is that acceptance good for? I have heard sometimes it is one day. Does that mean i need to line up my end-investor before submitting my offer or are some REO's acceptances good for longer? Am i missing something? Please help

Shannon Feol · Answer

To answer your question, the offer acceptance is usually good for 48 hours by which time you need to have signed documents and earnest money to the seller's agent.  But if they accept your offer, you made a good faith offer and shouldn't back out at that point!   If you need to do due diligence, do it AFTER the earnest money is down.

Shannon Feol · Answer

I'd suggest always asking for 30 days to close when making offers on REOs.  Some banks only allow 10-14 days on cash deals, but always try.  That way you'll have plenty of time to secure an end buyer.

If you are in a multiple offer situation, you can always change the terms and close quicker to make your offer more appealing.

Just don't be the guy who "always" backs out of contracts.  Your reputation is important and assest managers/REO listing agents will remember who you are and won't take your offers seriously.

Shannon Feol · Answer

Here in Memphis, I tend to offer $500 on properties that are less than $30K and $1000 for anything over.  However, a lot of bank sellers have a required amount (i.e. $1000 or 10% of purchase price for cash deals) - so ask the seller's rep when making the offer.

Daniel Fernandez · Answer

Ok Thank You both, So making offers with a POF and Standard Purchase Contract will give me a good timeframe to find my end investor? I dont want to market any property until I actually have interest in the prop. Thanks again

Daniel Fernandez · Answer

Oh i forgot to ask what is a good EMD amount? i heard 1000$ should be a minimum, what do you think?

Jon Holdman · Answer

You won't be making those offers with a letter of intent.  You'll be making them with a standard real estate contract.  That will specify a closing date, either as a specific date or as so many days after mutual acceptance.  Something like 30 days would be pretty typical.

You'll also have various deadlines such as loan commitment and inspections.  Once these go by, you're out of outs, and you will lose your earnest money if you don't close.  REOs typically have a $100/day penalty for each day the closing is delayed because of you.