How to Buy a REO REO is a Bank Owned Property. Many of the homes on the market are REO’s. In some neighborhoods, it is a much higher percentage. Some of the luxury communities it is much lower. Reo's are not Short Sales. Short sales are listings that have been put on the market below the amount the home owner owes. The banks in most cases have not approved these sales. It may take up to 4 months to find out if they will approve it. Yes our market has changed! These as the things you need to know before looking for a home in the Las Vegas valley. 1. First and foremost, you need to be pre-approved for a loan. We ask that you get that before you start previewing homes with us. You will need to have the approval letter ready to submit with your offers. This is not a Pre-Qualification letter but an approval letter. The letter needs to include your Loan to Value Ratio, Amount approved, FICA Score, Debt to income ratio, and proof of funds for your down payment. This is also true for cash buyers. The bank looks at it this way. A lot of the time cash buyers decide to finance at the last minute. This way they are all ready to go. 2. You will need in most cases at least $5,000K for an earnest deposit. Earnest deposits are to be in certified funds. 3. Lots of patience. Now we can look. If you think you can go online and selection some homes and drive by them. Don't bother. We have to call on every home first to see if it is still available. Most have multiple offers. I have had clients driving to the location and it went pending during their trip over. So it is better to work with an agent who knows the ropes and calls first. Otherwise you are wasting time. 1. We will choose homes that meet your criteria. We will look for homes not over your price range. I will explain later on. It is necessary to be as specific as possible. There are too many homes and it needs to be narrowed down to a manageable level. 2. When looking at the homes, keep in mind that the banks don't fix them, guaranteed them, or give you money to fix them. You will be doing all the repairs. When you find one you like, you have to act quickly. Get the offer done. 3. The amount of your offer will depend on the condition of the property, location of the property and the days on the market. The shorter days on the market, the less the bank will deal. If the property is located in an area of few foreclosures, then the less they will deal. If the condition of the property is good, the less they will deal. 4. Your Offer. Get real. The banks have already dropped the price in most cases to 70% of the original purchase price. They are not going to move much unless the property is bad condition, in a bad location, and has been on the market for a long time. In some cases the property can be in bad condition and in a good location and they don't move either. It has been our experience that there will be multiple offers on desirable properties. So get ready for your highest and best offer. This is the reason as in #1 that I said we would stay under your price range. You may have to go over the ask price to win the contract. You can ask for up to 3% in closing costs in some cases. 5. Now we make the offer. You will now have to have patience. It might take a while, up to 3 weeks. The banks will collect the offers and counter with highest and best. You will come back at them with your highest and best. After the counter it usually only takes a couple more days to find out if you won the contract. You will have to sign disclosures that there are no SRPD. (Seller Real Property Disclosure). Also no disclosures on Mold, lead based paint and no walk through disclosures. We will do a walk through; however, they are not fixing anything that is wrong. We recommend a full inspection of the home, during the due diligence period as well as purchasing a home warranty. This is simplified, but it gives you an idea of the process. Short Sales Short sales are sales by individuals who own the home and owe a mortgage to the bank. The amount they are listing the home for is less that what they owe the bank. Banks must approve short sales. In most cases, they don't. Short sale listing prices sometimes are way low. So when you are looking on line, be careful to not confuse a short sale home with something that is priced correctly. My site doesn't show short sales. We don't work with them, they are really frustrating. |