How to Make an Offer to a Bank for an REO Home
Buying an REO home from a bank can be a tricky task, as you are at the whim of both the bank and the original owner. The owner must agree to the terms of the sale and all business must go through him and the bank before you can take possession of the house. By making an offer as close to the bank's listing price as possible, you can save thousands of dollars on the purchase due to the competitive pricing that an REO property offers.
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Instructions
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Prepare your offer in writing. The bank will only take offers in writing. Include your financing pre-approval information, your credit history and proof of income to cover all your bases. You may only have one chance to get an REO property, as there is often much competition in this market.
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Combine your offer and supporting paperwork into one single electronic document. Place all of your documents into a PDF file for ease of reading; faxes are often difficult to read and deteriorate over time, so email is now the preferred method to send an offer to a bank on an REO property.
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Send your offer during normal working times, Monday through Friday, 9 a.m. to 5 p.m., if possible. If sent at this time, you may see a response within a week if your offer is reasonable and the concessions you want are not too great. The bank will factor in any concessions when determining the best offer.
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Have the property inspected; the bank usually does not do this on its properties. The bank is often located far away from the property, so it uses other real estate agents in the area to determine the value of the property. These "Bankers Price Opinions" are used to calculate a fair price for the property using area conditions and comparable properties in the area.
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Keep your offer competitive. Since REO properties are priced below the market value in many cases, banks are not looking to budge much on their pricing. Many homes go for above the list price, so consider that and ask for the bidding history on a property to see how aggressive potential buyers have been up to that point to come up with your figure.
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Wait for a response from the bank. They are often very slow to respond and do not usually counter on REO properties as this is not their main business. Since you have come with your highest and best offer for the property, you will not get a second chance. The seller will then add any addendums and will send the results to you. You will have a short length of time to accept or reject the deal.
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