RISMEDIA, June 29, 2011—Someone once likened selling REO properties to rooting for the House at Blackjack or being a Yankee fan; as a lifelong Red Sox fan, that second one hurt.
There are many opportunities for selling agents, though. The volume of properties that banks have acquired has forced them to look at home values with clear eyes. In many ways, representing clients in the purchase of a foreclosed home is no different than helping them with the purchase of a home from a traditional seller.
Unfamiliarity with the differences, however, can lead to frustration, delays, unnecessary expenses and missed opportunities.
Low offers – few sellers—traditional or institutional—look forward to reviewing offers significantly below asking price. While a traditional seller may react emotionally to a low offer, a bank will not. In fact, they probably won’t react at all. In instances where a property has just been listed, your client may not even get a counter-offer.
Institutional sellers do their best to set a price at which their properties will sell within 90 days. An offer that is less than 90% of the asking price will rarely be considered during that period. In fact, REO homes are priced so competitively, we often see multiple offers in the first two weeks of a listing.
Paperwork – Institutional sellers are big businesses that love procedures. Considering the huge volume of homes banks are disposing and that a typical asset manager handles 400 properties, it makes sense.
Most REO agents will include a checklist with every agreement they send to an agent for buyer signature. Please take the time to review it. Failure to follow it exactly almost always will cause delays and extra work. And “minor” changes to a seller addendum requested by your client or their attorney? Not going to happen.
Managing expectations – Buyers and their agents often come to a transaction anticipating certain things that may be typical in a traditional sale.
Buyers should never assume a price reduction from a home inspection, seller repairs or a closing date carved in stone. A buyer considering making a payment for a rate lock should be counseled that there is a 20% chance a title issue will cause a closing delay.
Navigating your client through the process will likely lead to increased sales and referrals.
Tim Waldron is the Regional Developer for Realty Executives New England.
For more information, please visit www.realtyexecutives.com.