5 Questions to Ask Before Making an Offer on an REO
If you are interested in buying REO houses to save a bundle of money, get ready for disappointment. Although buying REO property can be a good opportunity to pick up real estate at a small discount, the nature of an REO sale limits the amount of real savings that you can enjoy. Before
buying an REO property, ask yourself these five questions to set a realistic purchase goal.
Are There Any Inspection Reports?
Banks are not usually obligated to provide any sort of inspection reports on an REO property. In order to keep their costs down, they typically will not offer an inspection. If you have to pay for an inspection, make sure that figures into your offer on the property.
Has the Bank Offered to Do Any Work on the Property?
Banks are not necessarily required to repair an REO property for sale, so even if an inspection turns up problems, you may still be footing the repair bills. Figure the cost of needed repairs into your initial offer, or give the bank the opportunity to have the repair work done at their expense.
Is There a Special “As Is” Form?
If the bank insists on a special “as is” form, ask for a copy of the form, and study it carefully. If you have been avoiding the cost of an inspection until now, the as is form should be your final notice to check out the REO property before negotiation begins.
How Long Will It Take the Bank to Accept the Offer?
The answer to this question depends on the bank’s policies. Once a property hits the REO stage, the bank has a vested interest to get as much value out of the property as possible. When you make an offer to buy an REO property, the bank will typically take several days to review the offer before making a counter-offer or giving approval.
How is the Offer Delivered?
If you are preparing to buy REO, find out how the bank accepts offers. Each bank will have a protocol for this step in the bidding process. Often, you may not be required to set foot in the bank.
Once you have answered the five basic questions about buying REO property, take a careful look at the actual costs involved in the transaction and determine if you can clear a small, realistic savings on an REO property.