Working with a real estate agent to buy a bank owned property
Working With a Realtor to Buy A Bank-Owned Property by Brent Wilson http://Reochronicle.com/blog Your success in investing in bank-owned properties will depend to some extent on finding and working with a suitable Realtor.
It’s also wise to do some of your own research on local REOs (bank-owned property), whether it be via REO web sites, the local multilist (Realtor.com), or any other resources you can find.
Some Realtors are competent in dealing with REOs and will readily show you any listing, and some are not so competent. Some Realtors become reluctant to show very cheap houses, since the commissions are so low. It is critical that you find a Realtor who will show you EVERY house that might be suitable, no matter how cheap. Some Realtors also become reluctant to show some REOs because the lenders pay only a low commission, and they could receive a higher commission if they show a different house.
This sort of selective marketing by your Realtor will work against you at every step of the way. You need to be sure that the Realtor you work with understands up front that they have to show you everything that meets your guidelines, no matter how cheap. Let them know that you will be a repeat customer, so anything they don’t make on one transaction should be compensated for over time.
Some Realtors, even when they belong to the multilist, are reluctant to show the listings of other Realtors, since they don’t want to split their commissions. Working with this sort of Realtor is usually a waste of time, since their potential inventory is usually quite small.
When the REO market gets into high gear and a majority of houses sold are REOs in some areas, the conventional Realtor will either have to change or get out of the way. You should be sure to work only with a Realtor who has successfully adapted to the changed market. Many Realtors also don’t like to show properties which are very rough or in bad areas, but again, you have to see these places, since there are bargains buried among them. Sometimes the worst looking (but still well built) property is the best deal. This coming market will be so different from what the average Realtor has grown accustomed to that most conventional Realtors won’t learn how to operate successfully until several years have passed.
General Strategies
Two of the best sources of REO bargains, once foreclosures become more numerous, are new listings and price reductions.
Some lenders will begin at a low price to sell a property quickly, so some buried treasure can be found in the new listings.
Price reductions can also be a source of potential bargains. If a property has sat on the market too long, some lenders will slash the price quite a bit to move it, depending on circumstances.
Ask your Realtor to send you a daily or weekly list of price reductions and new listings in the areas that you are interested in, especially after the foreclosure activity picks up in your area. You need current information on these so you can be first in line for the real bargains.
As times goes on and the REO inventory mounts, it will become more and more of a numbers game. You won’t get all the places you make offers on, but you should get enough to make things work. Don’t get hung up on the places you miss, just keep in the game and look for the next one.
Be sure your Realtor has time to submit offers in a timely manner. A day or two in delay can cause you to lose a lot of good deals. Your deals will probably be smaller than their usual business (lower prices equals lower commissions) so it’s critical that your Realtor is service oriented, with an eye toward a long working relationship with you, rather than just how much money they can make on any one deal.
By the same token, be a good client, make solid offers, don’t waste your Realtor’s time, and do what you say you are going to do.
One thing that will help you above almost all else is the ability to size up a property quickly, to know if it meets your criteria. Work on this and learn how to quickly eliminate from consideration any properties that are unsuitable. When you do meet your Realtor, you’ll be able to walk through a place and know immediately whether you want to make an offer on it. This will save a lot of time on everybody’s part, and a lot more bargains will come your way.
First of all congratulation for such a great site. I learned a lot reading article here today. I will make sure i visit this site once a day so i can learn more.
You hit on the key: finding a *good* agent… a bad agent will really ruin your day and make you discouraged. As a real estate investor, we must focus our time on those things that are most important and make us money. We trust our agent to handle all the ‘behind the scenes’ details which allows us to concentrate on what we’re good at.
Thanks for sharing the great information. All of these tips are very relevant to all who are trying to find a good realtor.
In the office I am employed at, it’s our company policy to show all homes, regardless of low price or bank-owned status.
And we actually close more deals this way.
Thanks for the info, I always wondered how the REO market worked.
Thanks for this great info. What about going it alone - without representation? Will banks work with independent buyers?
I definitely agree that finding a good Realtor that will show you everything is critical. I’ve ran into too many that wont show you cheap property’s. I don’t agree with that.
I just bought a house and even know I had to find the good listing myself Its still a good idea to hold on to your Realtor. They can still guide you through the buying proses with some great advise
The real estate market is often complicated and risky, whether buying or selling, home inspections should be geared towards your protection.
I always tell people who are interested in a property that is a short-sale or foreclosure this, don’t expect that you will get the property. Write it up so you can withdrawl the offer at anytime and DO keep your eyes open for property after you submitted an offer..
Excellent artilce! Your advice to find the right agent for your purchase is right on!! Buyers should actually interview a few before making their selection. You will be spending so much time together that you want to make sure the agent and you get along well,and that he/she takes the time to get to know you and know what your ideal home and buying situation is. It will keep you from wasting valuable time.
Thanks again for the post…you have a great site!
Interesting and informative post, thanks for share!
Good tips, I agree that some Realtors would just be reluctant but I think now many more realtors are thinking for their clients rather than for commissions because they’ve realized that true success and reputation plus wealth comes with being true to your client and focusing on their needs rather than their own.
Good information, you should do an article on how to weed out the good realtor from the bad… what is your cretiera for keeping a realtor on. (from my point of view the potential clients a realtor has the more chances he will have to sell there property when the markets are good… everything goes in cycles)
REO (Real Estate Owned) is a home that the bank takes back from the owner that is not sold at auction. Typically, the bank will work with the home owner to help them cure the default so they can avoid the foreclosure because the bank does not like being in the real estate business. In other words, they do not want to have property on their books. The REO property is typically property that has a mortgage balance equal or greater then the value.
In today’s market realtor are showing a a lot of REO due to the fact the market is flooded with them.
Great article! I agree with you. I also would like to add couple more alternatives to those homeowners who want to stay in their homes.
There are two products those aren’t widely knowing and common in the market place. Trsutee Foreclosure Delays and Loan Re-Write.
Did you know that Homeowners are illegally being foreclosed on especially in Trustee States?
In Judicial Foreclosure states, a judge reviews the legality of the foreclosure proceedings to ensure the homeowner is being protected against greedy lenders and yet still the lenders are not properly following the foreclosure laws correctly (see this article: http://www.nytimes.com/2009/08/31/nyregion/31judge.html?_r=2).
In Trustee States, lenders employ a “third party” trustee company to replace the legal function of a judge and orchestrate the foreclosure process. If banks are not legally foreclosing when they know a judge reviews the case what do you think they are doing when they only have to go through a trustee that they pay? And what is more interesting, the trustee company is liable for the foreclosure proceedings but who is going after the trustee companies to review the legality of these foreclosure packages? You guess it! Yes, No one is..!
Did you know that a loan Re-Write program has the ability to reduce homeowner’s current loan balance down to the current market value at prime + 3%?
Here is an example: You owe $500K on your home but it is only worth $350k. Investors will bulk purchase the note from your current lender and re-write it back to you at $350k, saving you (the homeowner) over $150k!
I hope this helps!
To find out more about our services you may want to visit http://ASNDinc.com/
Yamen Elasadi
yamen@ASNDinc.com
Thanks for sharing the great information contained in this post. All of these ideas are very improtant to all who are trying to find a good realtor.
Very well written and informative article.
I referred few investment and realty blogs and can say that it will take end of 2010 to appreciate values again. What do you think?
great stuff. How are things working out with the banks since the bail outs? I understand they are gun shy about lending these days.
Thanks for this information matey, now that the market is showing signs of responding well out of recession-best to be making use of such info.
Well spoken! So many people ignore the important question “Does this realtor have direct REO experience?”. Great information, will recommend.
Fantastic stuff here.
Back in UK it’s hard to find info on, what we call, Estate agents, there is much more here.
I am a real state agent in London. I came across your this blog and found more useful tips. thanks for sharing.
Great post and I thank you for sharing it with us.
I like the quality of your post and it is informative too. Choosing a right real estate agent will lead you to sucess.
Great info…it is so important to have a local expert and professional provide you with sound advice. If the investor is from out of town, they should consult with their own hometown realtor who may very likely have a knowledgeable realtor they can refer to. I always recommend having a realtor who is an investor themselves.
Most banks will not provide financing on their REOs but it doesn’t hurt to ask. Especially if the property has extensive damage and you are purchasing it “as is.”
Great article brief and concise tips.
Do a google search and find your local real estate investor. Many times they already have a business relationship with the banks and have bought reo houses for sale before. Then you don’t have to worry about paying any realtor fees.
Hey,
Awesome post. Please keep it up with your posts.
Thanks