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How To Buy A REO Home

In our last post, we looked at the definition of REO homes. Now that you know about this unique property classification, it’s time to wonder whether or not to jump in the market — and if you do, what can you do to stand apart from the competition?

First, start off by identifying a REO agent and a buyer’s agent. The REO agent lists the REO homes, the buyer’s agent works for you by negotiating. Now let’s look at how you win one of these homes.

Great REO homes at below-market prices will often see multiple offers, even in the tens or twenties depending on the area. How can you distinguish yourself from the pack in a competitive environment? Two words: value and research.

Now, let’s keep in mind that every bank and REO agent act differently. Some will always go to the highest bidder, some will let the top few duke it out, and some will open up a negotiating period. That’s where research comes in. First off, you can find out what the original loan was of the home (and thus, figure out what the bank roughly lost when it foreclosed) by checking out public records. This should be a guideline for your bid, and use this knowledge when evaluating a bid’s start point.

The next thing to do is to look at the agent involved. How does he or she like to run things? Highest bidder? Negotiable process? 3% over the ask price? Take the time to investigate an agent’s history and try to piece together a pattern. This research can be invaluable as you create a bid.

Dollars are nice, but bids go beyond that. Let’s look at the details. Can you pay cash? Can you relax — or even eliminate — inspections? Are you willing to waive repairs or split fees? Consider the whole bid as a cumulative score, where the dollar amount is 75% of your score and your concessions are the remaining 25%. If Buyer B offers a slightly lower dollar amount from Bidder A but a faster turnaround, with cash while skipping inspections and repairs, the bank may see the advantage in going with Buyer B.

Search for foreclosure homes www.bestreohomes.com

The views published here are the opinions of the writer and are not a substitute for legal counsel.

Posted: Thursday, February 25, 2010 3:03 PM by Israel and Rachel Gonzalez

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