Win the REO offer of your choice.
Increase the chances of your REO offer being accepted:
- Earnest Money Deposit (EMD) is a must—Don’t even think of making an offer on a Bank Owned Property without an EMD. The bigger the deposit the better as the Asset Manager will perceive your offer as more committed if another comes in at the same price as yours.
- Investigate—Know the value of the property prior to making the offer, run comps, have your agent do a CMA. Investigate other properties in its price range and location, view those homes on the market. For more information on Hawaii home foreclosures see my previous blogs.
- Cash Buyers—Proof of Funds (POF) are essential if you are a cash buyer. Never include POF for more than your offer. Alert your bank to be on standby in case your first offer is countered at a higher price, so they can move quickly to supply another POF for the higher amount.
- Lenders—You must obtain a pre-approval letter from your lender if you plan to get a loan. Most agents are reluctant to work with you unless you have one or the other (POF or Pre-Approval) and banks will certainly not accept offers without one or the other.
- Offer Price Recommended—If you are targeting REO properties that have been on the market under 90 days, don’t even think of making a lowball offer. REO Banks are following a marketing plan and rarely deviate from the list price. Remember, REO properties are already on sale!
- If Listed Over 100 Days—When making offers on properties listed over 100 days you may consider 2% less. Normally, the bank will lower the listed price every 30 days or every time it falls out of Escrow depending on different variables. (See my blog, Hawaii Home Foreclosures – Lowball Offers and How to Make Them, Part 4.)
- 30 Day Close—Use the lender that has the most experience closing REOs and knows the importance of closing in 30 days. Banks love to see 30 day closings, or 2 weeks if your offer is cash. Don’t write a 30 day closing into your offer unless you can deliver. The reason is that banks charge a fee for every late day over the agreed upon closing date.
RECAP: Who is the lucky buyer of a REO?
- One who asks for NO contingencies
- Pays cash and closes in two weeks, even if the offer is less than a buyer with a mortgage.
- Acquires a mortgage and closes in 30 days.
- Hefty EMD, $50k + works. Show your commitment!
- Pays over list price if bidding war ensues. Ask your agent for advise and know your market.
- Pays asking price, or 2% less than asking (if on the market over 100 days).
- Lowball with a very compelling reason that is explained in an email to the listing agent with backup newspaper articles.
- A buyer who has an experienced and tenacious REO real estate agent.
Do not go over your budget!
Our offices are working upwards of 30 pre-foreclosures (properties not listed in the MLS) at any given time. To protect homeowners or tenants currently still living in bank owned properties, and because of MLS rules, we are unable to give out addresses of our unlisted pre-foreclosures.
However, as bank owned properties are able to be listed on the MLS, and if you answer a few questions below, we can contact you first when a property of your dreams is about to be listed. Also, be sure to check out my gallery on Maui Short Sales.
Please call or send me this information:
- Assets you desire in a property. ( i.e. acreage with a house and cottage, condo, 3 bed/2 bath, swimming pool, vacation rental on the golf course, etc.)
- Pre-approval letter or proof of cash. I would be happy to send you names of loan officers, so that you can be pre-approved and ready to make an offer.
- Preferred location (i.e. W. Maui, S. Maui, or an actual town such as Haiku, Kapalua, Kihei, Wailea, or a zip code).
- Phone number, name, and email address.
Kathleen Wilson, SSCP – Short Sale Certified Professional – Five Star Institute, RECP – REO Certified Professional – Five Star Institute and SFR – Short Sale Foreclosure Resource.