How to Buy an REO
The topic is not how to find an REO house to buy in Fort Myers and Cape Coral, nor is it how to determine what REO home to buy. If you need help with these topics call me and let's sit down. What I want to talk about is how to buy the one you have identified.
Buying REO homes in Florida is not like buying a home from an individual. You are buying from an institution. There are no grey colors; only back and white. It also is not a race. First does not count. Highest and best counts.
Let's talk about highest first. You need to be working with an experienced and thorough real estate agent that can make you just as knowledgeable as the real estate asset manager for the bank that is handling the decisions. The asset manager had at least two real estate agents prepare a BPO (Broker Price Opinion) for the subject property. You need to do the same. Do not hesitate to pay for these BPO's . You should be able to get them for $50 to $100 each. If you are a loyal client and willing to sign a buyers rep agreement with your agent, I am sure they will do one for you free of charge.
Let me take a moment and talk about real estate buyer rep agreements. You might be hesitant to sign one; and you should be. I can understand how you feel, and I felt the same way when before I becamea real estate agent and I was using agents to do work for me as a buyer. But then over time I realized that good agents work hard and diligently and have many demands on their time. But I need his full attention and I need to let the agent know that his efforts will ultimately be rewarded.
Back to the real estate BPO. The BPO will give you a good idea what the home is worth and what the bank will accept. Just like in any negotiation it is helpful to know the other sides' motivation. The bank's motivation is simple - Highest price quickly. They want simplicity and no contingences. They want to move onto the next property. Which is where we come to BEST:
Once you see the BPO for the house in Florida that you want, ask for all associated documentation. A good REO agent will have things like condo docs, tax records, sales history of the property, and perhaps old surveys or inspections. Go talk to neighbors. Visit the area a few different times of the day. Go on the weekend. Get to know more about this property than anyone else. Look at the short sales in the area.
Whenever possible make your inspection prior to the offer. Do not make the offer contingent on ANYTHING. Your competition may be a higher priced offer but may come with a seven day right to inspect. You may win the bid at a lower price if you have already done your inspection.
Many years ago I bought a house in Cincinnati from a bank. I looked at the property and decided what it was worth. I then found out that there were three bids higher than mine. I wound up not making the bid. Ninety days later, almost to the day, my agent came back to me and told me the bank called her and asked if I was still interested. It seems that all three of the other contacts fell though during the due diligence period. I told her I was interested but I needed to go through the house one more time. I took a clip board and assumed everything that might need to be fixed HAD to be fixed. I wrote all these cost estimates down. I submitted my bid based on cost estimates for it all, but with NO contingencies for inspection or financing. The bank called me directly a few days later and said they would like to save some time and counter my offer over the phone. I replied that I could save them a whole lot of time as they already had my final bid in their hands.
I got the deal. (By the way the only thing I did not have to replace that I thought I would have to, was the slate roof. It cost only $135.00 to repair.)
Ask your agent if there are any addendums that the bank needs signed and you can get ahead of time. Normally banks ask for proof of funds or your ability to borrow. Even iof they do not ask, give them that information and make it easy for them to verify balances by including your banker's phone number and name and email address.
Ok, you have your nice tight package that is now in the hands of the bank. Don't stop there. Follow up. Talk to the banker's agent. Are their other offers? What are they? How many? The seller's agent has a job to do - and that is to get the highest and best offer that he can get for his client. If it is in the banks best interest to tell you that you are two thousand below the next offer, he may tell you that - hoping to get you up a few thousand. Many banks set a deadline for offers; after the deadline they come back again and ask for "highest and best" again. You may be able to pre-empt that process by having such a solid first offer that they take the path of least effort and accept your offer.
Do not be discouraged. The process is not as much art as it is science; but there are still personalities involved. Good real estate agents know how to get to the personalities and make the deals happen, but excellent agents go beyond that and make certain that there are no other reasons for the contract to be thrown out by the bank. They will help you make a tight offer that is highest AND best. Good luck and good buying.