7 Tips for Getting Your Foreclosure or REO Offer Accepted

To make an offer on a Bank Owned Property (and have it accepted), you must have the following:
– If you are financing the transaction, a pre-approval letter stating that the income, assets, and employment have been verified. This is different from the standard pre-qualification letter given by a mortgage broker for a traditional sale.

– Proof of Funds to prove your ability to afford the closing. (A statement showing your account balances typically works well.)

– Once the offer is accepted & the executed contract is signed, a cleared deposit check of at least $5,000 will be required. (fully refundable prior to end of review period)

– Fully signed & completed Contract for Purchase and Sale with NO financing contingency (either an approval letter, or cash offer…)

Can I use my own title company?
– Typically the bank will require you to use their title company to do the closing. They have already researched the chain of title, and are familiar with the bank regulations. They will however, pay for the title insurance, saving you approximately .5% of the purchase price.

What if my lender cannot close on time?
– You may be charged late fees for any extensions. This is why it is imperative that you are preapproved. The most common late fee that we have seen has been $100 per day of delay.

How did the Bank arrive at the asking price & is it a good deal?
– The bank will consult with their real estate agent(s) and set the price at full market value.

– Typically the bank looks for a price that is within 5% of the asking price. If the bank is asking $350,000 and you offer $280,000, it is almost certain that the bank will reject your offer or give you a counteroffer that is closer to the list price. The rule of thumb is that if the bank would accept $280,000, then they would ask closer to $280,000. If they don’t get their price, then they will lower it every few weeks until an acceptable offer is received.

– There is a common misconception that purchasing foreclosures is a great way to steal a property for dirt cheap. This is not the case any longer. The banks are looking to bring as close to current market price as possible, but are more concerned with a short escrow period and seamless closing.

– Because of the recent popularity in purchasing foreclosures, most properties in the popular price range of <$150k now enter into multiple offer situations. When this occurs, it is a good idea to offer your highest and best when the final call for offers is sent out. Many times the properties will end up going into escrow for $10,000 or more ABOVE asking price.

If there are multiple offers, how can our offer stand out?
– Having a larger deposit, waiving the financing contingency and showing proof of funds will get the bank to want to work with you, even if your offer is less.

Make sure the agent you choose is:
– Experienced in working with banks

– Knows how to structure deals to make sure you are protected

– Represents you as a single agent

– Has a proven track record with foreclosures

What if the property needs work?
– The bank WILL NOT make any repairs. They sell the property AS-IS. For this reason, you have a review period to make sure the property is suitable. Some are in perfect condition, some are in terrible condition. Either way, you should do an inspection after your offer is accepted.

We have spent the past 4 years cultivating win-win relationships with many foreclosure listing agents in South Florida & used their knowledge to best suit our clients. To date, we have experienced a 100% closing rate on contracts accepted on REO properties as well as a 100% acceptance rate for offers submitted. If you would like more information on buying Miami foreclosures, email sarahelles@kw.com or call 305-741-5441.

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