House Refinance Center
Buying Bank-Owned Homes (REOs)
Tricks To Buying
Real Estate From
A Bank - REO
There are tricks in every trade. Real estate is
no different. Use some or all of these tricks
and you will close the deals you go after.

1. Cash is king.

If you can pay cash for the house do so. Make
it known to the bank that you are a cash buyer.
You will get a deeper discount and you will
close quicker.

2. Over priced houses.

Most buyers are looking for the cheap house.
They are competing against each other for the
'bargain'. You should go the opposite route.
Look at a house that is over priced. Chances
are that the house is sitting on the market for
over a year and didn't get not even one nibble.
You come along, show some interest and ask
for the big discount. The bank is tired of
looking at the house on the books and says
'yes'.

3. Buy at the end of reporting period.

Banks have their financial reporting at the end
of the month, the end of the quarter, and the
end of the year. Any properties that are off the
books at the end of a reporting period makes
the bank look better. Make your offer and
indicate that you are will to close on 'June
30th'. This is much better than simply saying
that you are willing to close in 60 days or 90
days. Also remember that the quicker you can
close the better. The bank doesn't want to
take a chance a lose a good potential buyer.
The competition might offer a better deal.

4. Work with a real estate agent that is
connected.

A good real estate agent can make or break
a deal. The bank has an asset manager that
is head of the department. Using a
professional real estate agent that has
connections to the bank asset manager is
key. The connection could be through the
listing agent representing the bank, an
appraiser that works with the bank or a lawyer
that closes deals for the bank.

5. Under listed properties.

There are thousands of properties that are not
fully listed or explained on the internet or on
the listing sheet. Most listing are so similar, it
is like if they all use a template. They give the
number of bedrooms, number of bathroom,
square footage and a few extra items. Many
time the important things like the landscaping
is omitted.

6. Repair assistance.

Ask the bank to assist you in making some of
the necessary repairs. Be reasonable and
provide full details of the repairs, including
how much and how long it would take.

Stick to your plan and be prepared to walk
away from a deal if the price is not right. There
are plenty of houses to choose from.
There is a large inventory of bank REOs.  A
REO is a property that is owned by the bank.
We all know that the banks would like to sell
these houses. So you would think that the
process of buying a property from the bank
would be simple. But you would be wrong.

How does the bank end up with so many
REOs. It all starts with the homeowner not
making his or her mortgage payments. Then
a modification is tried. It fails and things go
downhill rapidly. After several months of not
getting paid the bank starts foreclosure
proceedings. The home owner gets evicted
from the house and the bank takes
possession.

The bank will try and sell the house at
auction. However, this doesn't always work
because there is a minimum bid involved.
The bank has to recover as much as
possible. When you add up the missed
payments, the lawyer's fees, the property
management fees, the auctioneer's
commission and all the other costs involved,
the starting bid is usually high. No wonder
many houses do not get even one bid. But
before you take out your anger on the bank,
remember that the bank has to show the
regulators and the shareholders that it is
trying to get the best deal for the
homeowner. Bottom line is that the bank
wants to get the amount owed on the
mortgage plus all the costs of foreclosure.

When the house doesn't sell at auction, the
bank takes back the house and invites the
public to buy a foreclosure. Many banks
have an entire department devoted to selling
REOs. If you try to purchase by yourself you
could be speaking to a different person
every time and also realize that the
department generally works Monday to
Friday, 9 to 5, no weekends. When you are
buying a bank REO, there are 4 keys to
making your purchase stress free.

1. Hire a real estate agent.

There are bargains in a bank owned
property, but you have to do your homework.
Find a real estate agent that specializes in
REOs and closes about 2 or 3 deals a
month. Once you decide on a house the next
step is to make an offer. But before a formal
offer you want your agent to contact the
listing agent and get a few details.
>Is there a pest or termite certificate.
>Is there an inspection report.
>How long does the bank take to accept an
offer.
>What work or repairs has the bank agreed
to do.
The bank doesn't like offers with many
conditions, but you have to put conditions in
to protect yourself. You will get a counter
offer, then you must go back with your own
counter-offer.

2. Get an appraisal.

This is a must. You do not want to pay more
than market value.

3. Get the house inspected.

This is also a must. REOs are sold 'as is'.
REOs are usually sitting empty for several
months, and sometimes 1 or 2 years. There
could be mold issues that would impact the
health of you and your family. The home
inspection report gives you ammunition to
ask for a credit for some of the repairs.

4. Arrange financing.

Most banks will not provide financing on their
own REOs. Get pre-qualified for a
mortgage. This shows the bank that you are
serious and that you have the financing to
close the deal.

Be aware that closing can take awhile. You
are dealing with a bank not a private
individual. There are several people in the
department that have to sign off on the deal.
But on the bright side, some issues like liens
on the property and a title search, will have
already been taken care of by the bank.

I still think that this is a good way to buy a
house. You need time and patience.
How To Buy
Bank Owned
Real Estate (REO)
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Houses For Sale By Banks
We expect a bargain when we buy a house
from a bank. What are they going to do with
so many houses? The have to pay
maintenance companies to upkeep the
property. They have to pay security to make
sure the house isn't vandalized. So one would
think the bank would be happy if a buyer takes
this problem off their hands and at the same
time give them some money.

Banks like to play hardball with buyers. They
act like "if you don't buy it at my price,
someone else will". They delay as much as
possible and try to get the market price for the
house.

How did they end up with so many house in
the first place. Well, the homeowners couldn't
pay the mortgage. The bank foreclosed. Then
the bank try to sell the house at a foreclosure
auction. There were no bids on the house. So
the bank tries to sell the old fashion way,
through the MLS system.

Watch the slideshow.