Win a REO Multiple Offer Situation with these 10 Tips
The REO (bank owned) housing market is hot in some markets. Surprisingly many buyers are running into multiple bid situations in which the bank will counter for all offers to resubmit their highest and best.
In some areas it is becoming increasingly common for REO properties to receive 2 to 5 offers. If you are wondering how to stand up above the rest to win the home, here are 10 tips on packaging the right offer for the bank.
1. Know What The Bank Paid
Do your research to find out how much the bank purchased the home for. Some times you can ask your realtor OR you can look up the home on Zillow.com.
2. Know the Comparables Sales
Know the recent sales in the area and compare those to the REO listing. The bank already has this information via a Broker Price Opinion (BPO) to determine a listing price.
3. Analyze the Listing Agent’s REO Pricing Record
Have your agent pull the history of the listing agent’s listing to see what their track record is of listing homes and check out the list price to sales price ratio. If most of the listings are selling about 5% under list price, it will give you some guidance on what you need to offer.
4. Ask About the Number of Other Offers
If there are no other offers, you can probably offer less than the list price and get the house. But if there are multiple offers, you will need to offer above the asking price in most cases. If there are as many as 10 offers, you may need to consider that some of these offers may be all cash offers which the banks prefer. If you are obtaining financing, you will need to increase the price to be considered.
5. Prepare an Offer Summary as a Cover Sheet
The cover sheet will simplify to the Asset Manager the overall price, terms, concessions, closing dates, etc.
6. Choose a Closing Date Before the End of the Month
Try to close escrow before the 25th of the month. Banks are assessed their handling charges on the first and if they have not received the check before the end of the month, there is an additional charge for the bank.
7. Submit your Loan Status Report
Show you have the proof of funds!
8. Give Enough Time for the Bank to Respond
REO asset managers are usually handling hundreds of homes and when they receive multiple offers, it can be overwhelming. It is suggested to allow 7 to 10 days to allow a response on an offer. Sometimes responses can come quicker or even longer. Make sure your agent is following up.
9. Don’t Try to Choose your own Title Company
Choosing the escrow company is typically the buyer’s choice but with bank-owned homes, the buyer needs to be more flexible. The bank will more than likely choose the title and escrow companies since they have significant amounts of title work done during the foreclosure process so they will want to stay with that title company.
10. Shorten the Inspection Period and Don’t Ask for Repairs Up Front
If other offers are coming in saying that they will conduct an inspection in 15 days, and you ask for 10, you may be deemed as the more serious buyer. Make sure your agent can help you make that happen within 10 days (home inspection, termite inspection, special inspections). At times banks may pay for repairs, but they usually will not agree to do so up front. If there are serious issues found during the home inspection, you could try to renegotiate after your offer has been accepted. The bank may be more willing to work with you or offer conecessions once the offer is rolling.