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10 Tips for Buying HUD and Bank-Owned "REO" Properties 1. Be Prepared - Get a lender loan pre-approval letter or have an up-to-date proof of funds statement ready to submit with your offer.  REO-Sellers will evaluate offers on net cash to seller and the likelihood the buyer can really close. 2. Be Quick to Take Action - Most distressed homes that are well-priced receive multiple offers within hours of listing on the MLS.  Do not delay submitting your offer, or risk missing out on the window of offer acceptance.  Sign up to be the first to know about new property listings that match your buying criteria. 3. Write a Clean Offer - REO-Sellers want to sell their listed properties quickly.  Contracts including lengthy inspection periods, survey and appraisal contingencies, and "weasel clauses" to get out of the contract will usually be disgarded without a second look. 4. Know What You Are Buying - Be prepared to inspect the property quickly after you are under contract.  REO-Sellers are wary of buyers who make higher offers, only to "fluff" their inspection repair costs in hopes of negotiating the price down.  Do not expect price reductions for obvious repair items, such as carpet, paint, landscaping or basic home updates. 5. Know Property Values and Area Trends - Though you can get a great deal in distressed properties, not every foreclosure home will be a great deal.  If there are many other foreclosures or vacant homes near your planned purchase, be aware that the appraisal may come in lower than expected due to new appraisal requirements. Study local sales trends and recent neighborhood home sales. 6. Know What is Negotiable - REO-Sellers are not emotional when it comes to selling REO properties - it all comes down to the numbers.  However, homes with serious repair items, such as structural repair, mold, electrical and plumbing systems, that may prevent a quick sale may motivate the REO-Seller to allow for some repair concessions, and REO-Seller may choose to contribute to pay for the buyers' closing costs if nearby home sales show similar seller concessions. 7. Know What is Not Negotiable - When your Realtor submits your Colorado Real Estate Commission-approved contract, you are very likely to get a counter-offer including many pages of contract addendums which are in favor of protecting the REO-Seller's interests.  Unless you agree to these addendums in full and as written, the REO-Seller will reject your offer. 8. Close On Time - When you make an offer on a home, an earnest money check is usually required to be submitted when the offer is accepted.  If you cannot close on the date promised in the contract, your earnest money deposit may be in jeopardy of being lost due to breach of contract.  Plan to close as quickly as possible, but know what is realistic for your situation and your lender's requirements to fund the purchase. 9. Don't Expect Your First Offer to be Accepted - There are many buyers out there picking through fewer homes for sale.  First-time homebuyers, investors, and current homeowners looking to downsize are all competing for homes priced under $200,000.  You may need to make several offers on different homes in order to get one accepted. 10. Work with an Experienced Realtor. Knowing what to look for in a home, where to look, and how to present an offer that is more likely to get accepted are critical skills to finding a great deal in this market.  Many times, the best deal is made through finding the most motivated of sellers, negotiating for price and terms that work for both the buyer and seller, and properly advising the buyer client to protect their  interests and needs while avoiding the pitfalls that inexperienced agents may not be aware of.

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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