Advanced Scouting for REO Buyers

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As of Q3 of last year, bank-owned REOs made up roughly 20% of all home sales across America. While this total is down from a year or two ago, it is still alarmingly high when compared to better times. More importantly, it appears that foreclosures will continue to make up a very healthy portion of overall sales activity for years to come, possibly as long as a decade.

So with millions of foreclosure sales having already gone down, one might think that real estate professionals representing buyers of foreclosure properties would be experts by now. A recent article provides tips for agents to help their clients successfully buy foreclosure properties. It is noteworthy not only for the insights that are provided, but for the ones that aren’t as well.

To check out the article, CLICK HERE.

In short, the National Association of Realtors advises their members to keep 4 things in mind when representing buyers on bank-owned deals.

1. Run the comps
2. Make sure the house isn’t in worse condition and it appears
3. Check for any special financing that clients could make good use of
4. Make sure title is clean

While it would be plenty of fun to take a few shots at these “key criteria”, there’s something much more interesting at hand. The average selling (buyer’s) agent approaches buyer representation as if an REO property made its way to the market the same way a fair-market listing would have. This is wrong, and is the crucial point where so much in savings is ultimately lost.

By developing a more complete understanding of the foreclosure process going back as far as the first late payment, agents would be able to lay bare the weak spots in the process where smart buyers can score additional savings. Yet since this isn’t done with fair-market sales, most agents don’t think to take this step when dealing in foreclosure properties, costing their clients money.

As a buyer, one must always keep in mind that the onus to reap savings is on you and you alone. Real estate professionals are generally good people, and will look to help their clients in any way they can, but since there is no expectation for them to understand the inner workings of the foreclosure process, one shouldn’t be surprised to learn that the vast majority are ill-equipped to save their clients as much money as possible.

So here’s the good news. Most buyers who mistakenly put all their trust in under-qualified real estate professionals leave the door open for clever buyers who hold an information advantage. For starters, check out these tips to get some inside information on bank-owned foreclosure properties that the competition, and in some cases even the sellers aren’t likely to have. But this is just the start. The opportunities to get the right house for the best price are plentiful, as long as buyers learn how, when and where to look!