Banks, like all sellers, want the most money with the fewest problems. The easiest way to achieve that is with a knowledgeable buyer paying all cash and accepting the property in its present condition or in real estate lingo, “As Is.” It is hard to have problems when someone has the money and is willing to buy without any windows, doors, dirty carpets or, heaven forbid, mold.
For most of us, that’s not too realistic. So how can you position yourself? First, like the Boy Scout motto: “Be prepared.”
Find a reputable lender and get fully approved. That means the lender truly does verify your income, down payment, job and credit worthiness. Do not go to your next door neighbor or cousin to do this, unless they are very experienced. And, don’t play games. A good REO agent will call and verify your status with your lender. Trust me they know the difference between a HELOC and money in the bank!
Be prepared to provide current bank statements verifying your down payment along with your loan approval. Be prepared to write a check for 3% of the offer price. Again, don’t play games.
Don’t get upset if the real estate agent asks you to get preapproved with the bank’s specified lender. Grin and bear it. They may have a better program and incentives your lender doesn’t have.
Ask your agent to write the Offer on the CAR Deposit Receipt or the contract specified by the bank. There are no exceptions to this process. Include an REO Advisory Addendum and “As Is” Addendum if possible. If you want time for inspections or time for your financing to be approved, make it short. Most banks want no more than 7-10 days. Have a copy of your deposit check, proof of funds and approval letter included in your offer. Ask your agent to provide a summary page for the REO agent. The more money down the better, 30 days to close the escrow and don’t ask the bank to provide a home warranty. Ask your agent to provide you with a home warranty at the close of escrow.
Please, please don’t be unrealistic. Offers for less than 90% of the List price are seldom considered. Many offers are going over the List price and the bank asking you, the buyer, to make up the difference if the property does not appraise for the Sale price. Again, be prepared.
Remember, the bank, asset manager and the REO agents have lots of files to deal with…so be patient.
Oh, by the way, the bank won’t sign your Offer until you sign and return their addendum which nullifies most of your terms and conditions. Some are very confusing and contradictory but if you don’t sign you won’t get the home. If you default after there are no contingencies in the contract, the bank will keep your deposit and if you can’t close on your contract date, you may have to pay the bank a per diem until you can close the transaction.
The transaction may be hard, the escrow difficult but in the end you will have a property that is an excellent value. You can make it shine with a coat of paint, new carpets and some grass seed. It will be a good place to live and/or an excellent investment now and in the future.