Keys to getting the best deal on REO foreclosure properties

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In real estate transactions involving owner-occupants, each seller has a unique set of goals and a unique mindset with regards to the best way to get things done. This can make things tough on a buyer because they are limited in their understanding of what it is that is making the person on the other side of the deal tick. In bank-owned foreclosure deals, however, the seller’s goals are always the same, and their protocol to go about achieving them doesn’t change from one deal to the next. This consistency allows smart buyers to develop a game plan that thrives within the REO system, and that can help them to get the best deals when buying REO properties any time, any place, over and over again.

There are 4 basic keys to getting great deals when buying bank-owned foreclosure properties. Buyers must:

1. Understand thoroughly the foreclosure process.
2. Learn all about the target home and the market area.
3. Work hard to develop a winning purchase strategy.
4. Coordinate effectively with industry professionals to apply the strategy.

Sounds simple, right? Yet more often than not, buyers skip one or more of these steps, or leave them in the hands of others. When this happens, they end up with less-than-stellar results.

Step one, buyers can benefit by knowing the seller’s process, from the foreclosure date clear through the close of sale as a REO. Some agents can help with this part, but never assume they can. Truth is, relatively few agents in any given market area have intimate experience with the bank’s foreclosure protocol, and those that don’t are prone to poor decision-making that can cost their clients money, time and stress. Each REO property passes through a system, and understanding this system is the first step in being able to exploit its weaknesses.

Speaking of weaknesses, the bank’s greatest weakness is that they are so overrun with properties to sell that they can’t give each and every one the attention it deserves. It isn’t right to say that banks are lazy or sloppy in their work as they sell so many properties. Better said, they are so overworked with the number of foreclosure properties they process, that many properties just don’t receive the necessary attention in terms of working out an appropriate pricing and marketing strategy.

Often times, the result of the relative lack of work put into each REO listing and sale leaves opportunities for buyers. When compared to owner-occupant sellers, banks are understandably ignorant with regards to the material facts regarding the property, and how they determine value. With proper direction, buyers can outwork the banks, learning more about both the properties themselves and the area market.

Armed with a formidable knowledge base, buyers can then develop a solid purchase strategy that will make their counterparts stand up and take notice. When submitting an offer, the banks are obligated to listen to would-be buyers, who can take advantage of this opportunity and present information that can be used to substantiate everything from discounts, repairs, credits, or whatever else that helps buyers to walk away winners.

After all of the hard work that buyers put in to getting things to go their way on a deal, the final piece of the puzzle lies with how their efforts come together. When making that offer or negotiating a price reduction, the key is for buyers to get on the same page with their real estate agent, in order to give banks precisely what they need to say yes.

At the end of the day, the banks want just one thing: to sell the property at fair market value in an abbreviated time frame. Buyers who have outmaneuvered the banks can help in setting the perception of value, shading it to meet the buyer’s own price target. In doing so, the banks expectations can be brought in-line with a buyer’s goals, with the buyer getting a great deal, and the banks thinking they got what was fair. One party wins, yet both parties walk away satisfied.