Tampa Bay Real Estate – Tips for Buying a Bank Owned Foreclosure REO – Tampa
Hello Tampa Bay –
It’s no common secret that the real estate market over the past year has continued to dramatically change towards a market concentrated in short sales, foreclosures and REO’s. For those of you that don’t know what REO means – it means Real Estate Owned. Its a term used to identify a property is owned by a bank. Banks actually consider REO’s a liability instead of an asset because they are in the MONEY business not real estate business.
As a Top Selling Team in Tampa and St Pete, we have modified our business to help service these “niche” markets. In the first quarter of 2009, nearly half of our business was selling (either listings or buyers) distressed properties. We have learned through much education, courses, certifications, and trial and error the best ways to represent buyers and sellers in these specific situations. I’m going to concentrate this post on how to help a buyer structure an offer and be prepared to offer on a bank owned foreclosure home. Below is a list of those tips:
Bank Owned Foreclosure Homes
- Make Your Offer Quickly! Banks price properties well below market. If you see a home in Tampa or St Pete that just hit the market as an REO and the price looks good, it will sell fast. The average time on market in some of our target markets for bank owned homes is 7 days! And that’s because it takes the bank many days to draft their “special addendums”. In the foreclosure market, if you snooze, you lose. You must be willing to work with a broker that knows this market and has the ability to help you get into properties quickly and ready to make your offer.
- Prepare to buy a bank owned home AS IS. Banks don’t typically make or allow for repairs. Most of the time locally, they prefer a FAR BAR As Is Contract, but that depends on the specific bank. Once your offer is accepted, you will receive a “special addendum” which will likely modify some of the terms/conditions and is typically not negotiable. It addresses some of the unique scenarios with bank owned homes and discloses typically that they haven’t occupied or inspected the home, may have to satisfy liens, etc.
- Make your Offer as STRONG as you can, especially if you are financing or using an FHA loan. Banks want cash so if you are financing, the following is even more important. Quick inspections, quicker closing, sufficient escrow, strong price and terms, and include a pre-approval letter or proof of funds with the offer. You are up against competition. You want to make sure you look motivated and able to execute. If you think the list price is low and are willing to be happy to pay more, don’t be afraid to offer more than list price. The most important thing to consider is what is the house WORTH, not what they are asking. They want an auction type response most of the time to bid the price up higher than list. I’ve recently seen bank owned homes sell for 20-30% ABOVE List price.
- Be prepared for hoops to jump through! Bank owned homes typically have title issues that need to be cured during the closing process or asset managers that are overwhelmed and can’t get documents back in a timely manner. Don’t take it personally. These people are overwhelmed with work and unable to keep up. You do want a clean title so don’t be surprised if the bank needs more time to fight with a servicer or hoa about a lien in order for you to close. Just plan on not closing on time, that way if you do, you’ll be happy.
Hope this helps in your pursuit of a bank owned property. There are surely other great tips to help you get the deal but I wanted to put out some basics first and can answer any questions directly as well. If you are looking for a team to help you get to the finish line in buying a great value home, or great investment in the Tampa Bay area, look no further. Give us a call at 813-359-8990 or drop us a line today!