REO Properties 101

REO properties are Real Estate Owned by banks. When you plan to purchase REOs, please prepare in advance, as REO properties differ greatly from the sale of a “NON” REO homes. The procedures of each Bank vary and are subject to change without notice. Following instructions are for informational purposes to buyers and buyer agents only and should only serve as a guide. Please call our office if you should have further questions.

• Offers must be accurately filled out on a CAR form and legible.
• Offers will not be considered without these items: a copy of deposit check, Pre-approval letter or proof of funds.
• Allow at least 2 to 3 business days for a response. Please keep in mind our clients are corporate sellers and often are managing several hundred properties at a time. Prepare your buyer upfront, we will call you when we have a response.
• If multiple offers, purchasers may be asked to sign a Multiple Offer Addendum and will be asked for their highest and best offer.
• Most offers are submitted over the Internet or faxed on a negotiation log, the contract is rarely sent to seller during negotiations.
• All Negotiations are verbal until we have reached a binding agreement. The contracts will be finalized and sent to the seller for signatures.
• The seller will “NOT” consider a contract if it is contingent upon the sale of another home.
• Offers will “NOT” be submitted until ALL required forms are received.
• The seller or 3rd party did not occupy the subject property. Therefore, a PROPERTY DISCLOSURE is not provided.
• BE AWARE, while this is a foreclosure, the seller has had an appraisal and 2 BPO’s completed prior to establishing the price. Offers based on “$0.50 on the dollar” or half the listing price will be rejected. Please take this into consideration when you are using your valuable time as well as ours to prepare offers.

Pre-qualification

• Pre-qualification or pre-approval letter is required before any offer can be submitted.
• Some REO companies require all potential buyers to pre-qual with them or a preferred lender regardless of their pre-approval status. Please look at the MLS comments for this.
• If offer is cash, proof of funds is required. A letter from the buyers bank stating funds equal to or greater than purchase price are available to buyer, or a bank statement in buyer’s name are both acceptable.

Deposit

• A deposit of a minimum of $1000 is required for most offers. Deposit check should be made payable to escrow company picked by Seller.
• A copy of the check must accompany all offers. (NO Exceptions)
• Deposit becomes nonrefundable after inspection period has expired.

Signatures

• We do not need originals for the negotiations; typically negotiations are done by fax or online.
• Seller does not sign anything until Buyer has signed.
• Assignment language is “NOT” permitted under any circumstances.
• If buyer is a LLC or Corporation, then you must also include the individual’s name.
• Purchaser(s) name which wants to take title should be the same on the contact, addendums, pre-qual letter/proof of funds, and depsoit check. 

Addendums

• Each Bank has their own Addendum to Purchase Contract in some cases this is required with the initial offer and with other’s they are not required until we have a mutually agreed contract. The listing agent will tell you.
• If any language in the purchase contract and the addendum are in conflict, the addendum language always prevails.
• All Sellers’ Addendums will state that the property is being sold “AS IS”.

Inspection Period

• All inspections MUST be completed and all contingencies MUST be removed on or before the contingency removal date.

Possession

• Purchaser can not make any repairs prior to closing.
• Purchaser can not “move just a few things in” prior to closing. Please don’t ask!
• Some banks impose deed restriction that limit the conveyance or encumbering the property for the first 60-90 days of ownership, please ask list agent about each individual property.

Escrow

• Seller always chooses Escrow & Title Company. (No exceptions) If unknown write in TBD on the contract.

• For closing date, be sure to provide enough time for the lender to complete the loan.

• The seller will charge a per diem penalty of $50-$100 if the closing is delayed at no fault of the seller.