How banks sell REO
Banks and Loan Companies see a REO (Real Estate Owned) as a sellable asset, but a sellable asset that is not being used to its full monetary potential while it is in their hands and on their balance sheet.
Due to the fact that banks want to sell the REO property as quickly as is possible, to release funds for further investment, as well as generate the best possible price to appease shareholders etc, they often have an entire department set up to manage their REO inventory and this department will be responsible for analyzing all bids received by the bank or loan company and generating an acceptable price for the property.
Allowing the prospective buyer immediate access to the property for inspections, to examine the condition of the house Flexible rehab costs, interest, closing points, loan amount, etc. Extremely low down payment Price saving of up to 20% off market value of the property Removal of all taxes or liens attached to the property
How to make an offer
Once you (the prospective buyer) have been attracted to the property due to the benefits on offer by the bank or loan company, you will normally make the bank an offer on the property. The response of the bank will be to counter your offer (to demonstrate to investors, shareholders and auditors that they attempted to get the highest price possible).
This counter-offer is standard for the industry and you should decide what you wish to do as a result of it. If the price is acceptable you can accept the offer, if the price is not acceptable to you then you can counter the bank or Loan Company’s counter-offer with one of your own and have their REO department asses its quality.
If they approve the offer, then all is well and good. If they reject the offer you should look at whether you are comfortable paying more or whether you feel that the price they are asking is either above market value or unacceptable to you.
If you chose to continue with the purchase once your offer is accepted, the bank or loan company will draw up a contract.
How long does it take the bank to accept an offer?
All banks differ from one another; however the large banks and Loan companies will have an entire department that is solely for REO sales. Depending on whether the bank that you are purchasing the property off has its own REO department will largely affect the time it takes for them to look through the offer.
A large bank will have a number of people who are involved in the decision making process, of whether or not to accept an offer. It is not unusual for 3 or 4 people to look through your offer and give their opinion. Generally however, you should give the bank around a week to look through the offer.
How does your agent deliver the offer?
REO property offers are usually faxed to the bank; As there is no formal presentation, the listing agent will need your original copies of the contract. You should remember that nothing happens in the evenings and weekends as banks are closed, so if you are in a hurry to purchase the property you should keep this in mind.
As there is no face-to-face presentation to the bank or Loan Company, you must provide the listing agent with a pre-qualification or a pre-approval letter.
- NUMBER1EXPERT™ 
