Before Submitting an Offer.

[Timothy Guidroz]

Who has tips/tricks on submitting an offer on a REO property? I've had my eye on one in my neighborhood since I moved in over 2 years ago. Still vacant, still being kept up at the expense of the bank. I know what bank owns it, and that's about all. Would be a great property to get under market value.

Any feedback helps. ZERO experience with REO.

[Kevin Hunter]

@Timothy Guidroz, here is the way it works, at least the ones I have worked with.   The bank takes it back from the owner in foreclosure.  At some time, no predictable standard schedule, the bank hires a listing agent to go out to the property, take pictures, take over utilities, summarize/winterize as necessary, and make an assessed value estimate or hire an assessor to do so, and recommend a sales price.  

They then hire an appraiser of their own, exclusive of the agent's affiliations to make an appraisal and recommend a sales price. They then use some type of a process to compare the two recommendations and set a sales price. Some time later, could be a couple of weeks or a month or two, they tell the listing agent to list it at a price they have decided on. It then hits MLS and becomes a "standard" sale....

Some banks have unique sale processes.  For example, Wells Fargo lists the property and will not entertain an offer for eight days.  On day nine, they begin to accept offers from owner occupant buyers only.  On day sixteen they consider all of the owner occupied offers.  If they don't have any, or don't like any, they open the property up to investor buyers.  This is how they run it my area of investment, may be different in other areas of course.

I made an offer on a bank REO on Thursday night at 6:00 pm. It is listed for about 70K and I offered roughly 25K. At 6:00 am the next morning, I received a counter offer of 61K. My assumption, as was my realtor's, is it was an auto-counter. How many bankers do you know that show up to work at 6 in the morning? I am on the east coast so there is no way the time zone affected it. We re-countered at 26K. I figure at some point my offer will get to someones desk and then we can negotiate. I mention this only to highlight the strange, impersonal experience that bank owned properties can be. Banks don't care about holding properties for a year, although you and I would say unload it and move on. Banks don't look at a property and think it would be better to just get it unloaded, until the time is right. It is just an unusual situation.

All of this is provided to give you a little bit of insight.  Good luck with that property. I hope you end up being able to add it to your portfolio!