General REO Offer Tips TEXT for availability, if possible GAR, copy of earnest money (payable to whom not important at this stage) and copy of prequalification or proof of funds ASK for confirmation of receipt in your Let agent know if owner occupant or investor Make sure proof of funds personal account information is hidden! Addendums typically now, after verbal acceptance

Multiple Offers Pricing on REO is now so aggressive, MO are becoming the norm on much of inventory Set correct expectations with your buyers… Do they want to go through the process and do they want the house enough to give best and highest over list – is it still a great deal even if they paid over list? – show comps, do homework!

What is First Look? day initial listing period, depending on client, that property is available only for OWNER OCCUPANT purchase Will have to sign OWNER OCCUPANT affidavit If parent purchase for child - Can be “owner occupant”, if parent IS ON loan and deed with child. Investor offers submitted, but no response until time period has passed

Multiple offers - continue Listing agent should disclose that they have a multiple offer situation and send you a MO disclosure form with a date and time to receive best and final from all buyers. Make sure you meet deadlines or your original offer will be submitted

What are banks looking for in offers Solid pre-qual letters! Lender needs to state that credit, debt ratios, cash to close, and income have all been reviewed. Well known lending institution – no “Wing and Prayer Mortgage Company” or “DOHARDMONEY!! Clean – price, closing costs and FHA $$ limit on lender repairs to be paid by seller. Appraisal, Inspection and Financing contingencies okay, but most REO addendums over-ride with their own language Don’t add a bunch of special stips!!

Condition and Expectations New Name of the Game: Most banks (definitely Fannie and Freddie) are repairing before house goes on market. We are seeing an average of $10,000-$16,000 spent on each of our homes IF it determined that most likely buyer is going to be owner occupant and/or the house will most likely go FHA financing.

Condition and Expectations cont.. Inspections are for INFORMATIONAL PURPOSES ONLY!! Help buyers understand that in an REO purchase, the inspection is an opportunity for the buyer to determine all home’s faults and decide if they can live with those faults. IF they cannot, they then have the opportunity to terminate and receive earnest money refund.

Condition and Expectations, cont.. IF FHA offer – put a $ figure in the FHA addendum of what you are asking the seller to contribute IF any lender repairs may be required to fund the loan. OCCASIONALLY, if there is a defect in SYSTEMS or STRUCTURAL, the bank “MAY” consider doing the work found in the home inspection or giving a price reduction credit in lieu of repair – OCCASSIONALLY!! NEVER send the listing agent the inspection report, unless requested –only and amendment!!

Utilities If house is an INVESTOR SPECIAL utilities will not be turned on due to safety issues. MOST banks require listing agent to have utilities on – many “REO” agents don’t have money to fund utilities and don’t turn them on – and, most of those agents would be fired if banks knew!! Properties managed by 3 rd PARTY ASSET MANAGEMENT companies sometimes will not have utilities on at property

Utilities continue…. So, utilities will be a hit or miss for you. Your buyer may be required to turn on the utilities for inspection in their name. Fact: if Fannie, Freddie, GMAC or Bank of America they should be on unless safety issue!

Closing Attorney Most REO agents will tell you that you MUST use the seller’s closing attorney (most likely one of the 3 M’s – McCalla, McCurdy, Morris) YOU DO NOT. If you want to use Weissman Nowack Curry – put it in offer and continue to counter back with it! The Seller’s attorney will coordinate with WNC.

Seller’s Required Lenders Many banks will REQUIRE a prequal from their lender – GMAC, BOA, Chase, WellsFargo in particular! Even if you are not going to use them, buyer MUST have that prequal or many times offer will not be entertained by the bank. GMAC, for example, will NOT execute the contract if they do not have a prequal from GMAC.

Helpful Websites See list provided = Freddie Mac = Fannie Mae

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