Why Your Realtor May Not Want to Sell You a Bank-Owned Home – Part II

Basically to have your bank-owned offers accepted you simply need to follow directions. What follows is a list of tips from REO agents on how to get more offers accepted.

1. Be realistic with your offer. If the property is priced right for its condition and location, do not offer fifty cents on the dollar, you’re only wasting your time, your realtor’s time and the REO agent’s time.

2. Make sure your offer was received in it’s entirety however, do not let your agent make more than 1 phone call to the REO listing agent regarding your offer. The best way to ensure your offer has been received is to hand carry it to the listing agent’s office or have your agent do it.

3. Do exactly what is asked for in the MLS. You can ask your agent to show this to you so that you know you are in compliance. The REO agents are only doing what the bank who hires them to sell the property wants. If you do not provide all the information listed in the MLS your offer will be ignored or tossed out. Typically banks want the following:

  • Pre-Approval from a direct lender and the lender required by the bank.
  • Bank Statements (proof of funds)
  • FICO Scores/Credit Report
  • HUD1 (closing statement)

4. Get a pre-approval from a direct lender as well as the REO agent’s or banks lender. If the REO agents lender is not listed in the MLS have your agent contact their office for that information. You will be able to get your loan from the lender of your choice but the bank simply wants to verify that you will qualify and can close the escrow.

5. Make sure all pages are correctly completed, initialed and signed where required. An offer with missing or incorrect information will not be considered.

6. Make sure all the funds you are using to close the escrow are in your name. You will be required to show proof of funds to close as part of your offer. Many buyers receive a gift from a family member. This is often acceptable in a traditional sale but not with a bank-owned property.

7. In a traditional sale it is customary to include a letter of introduction so that the seller has a little information on the buyer. Often this letter is written by the buyers agent to inspire the sellers to consider the buyers offer. The letter will talk not only about the offer but also about how much the buyer loves their house, how they plan to raise their family in the home, etc. Banks do not care. They only care about the bottom line. I recommend including a closing statement (HUD1) as well as a cover letter from your real estate agent with only the pertinent points of your offer, e.g. purchase price, FICO scores, and down payment.

8. Once your offer is accepted, you or your agent may have some expenses. For example, you will want the utilities turned on for inspections, rather than waiting for the listing office to do it, just handle it yourself. It’s a small price in the big picture and will make the transaction move forward faster.

9. If there are major repairs, e.g. a hole in the roof or no kitchen make sure your lender is aware of this in advance so that a solution may be devised and your loan will not be rejected or delayed.

10. Keep in mind REO properties are sold in strictly “as-is” condition. The bank will not do repairs but they may also not be aware of damage, especially if it is recently. When dealing with damage I recommend that you also include photos of major repairs with your initial offer as the bank and sometimes the listing agent may not be aware of them. Having this knowledge may convince the bank to accept a lower offer.

If your offer is not accepted, don’t talk it personally. The bank is only interested in their bottom line. Unfortunately, there are plenty of bank owned homes out there so you will likely find another deal in no time.