Writing effective REO and Forclosure offers




       1. How long will the bank take to respond to my offer?

Banks usually take 24-48 hours to respond to an offer, but can take as long as 7 days.


      2.  Will the bank provide any reports on the property?

No, most of the time the bank is not in possession of any reports pertaining to the property condition.  It is, therefore, the Buyer’s responsibility to perform their due diligence once in contract.


       3. Will the bank allow credits?

Maybe (likely to weaken your offer) the bank will look at your offer in its entirety and then make a decision about whether they will allow the credits or not.  Always check your Bank Addendum to make sure that the bank has accepted your request for a credit.


        4. Will the bank pay to clear any Section 1 damage appearing on the Pest Report?

It is highly unlikely, particularly if they have multiple offers; the bank generally wishes to sell the property in its current condition.  It is, therefore, the responsibility of the Buyer to address these concerns after Close of Escrow.  Look for a tag…


          5. Will the bank make any repairs?

This is an as-is Sale.  Generally, only repairs that are Required by the Lender will be addressed.  The seller is a lender and is very familiar with what would normally constitute a Lender Required Repair. 


         6. Who gets to choose the Escrow/Title Company?

The bank will generally choose the Escrow/Title Company.  Occasionally they will give the buyer the option to choose, but will pay for the Buyer’s Title Insurance, if you agree to use their Title Company.  Legally, you can choose!


         7. When should I begin my inspections?

If you are verbally notified that your offer has been accepted, it is time to order your inspections and forward the offer to your lender so that they can begin to process your loan.  The bank will not tolerate delays due to your lender not performing in a timely fashion.


         8. Can I back out if I find something unacceptable in their inspections?

Yes, the buyer can cancel the contract and receive their deposit back if they do so within their Inspection Period.


         9. Can I assign the Contract to someone else?

No, assignment of contracts is not permitted and change in Buyers will generally void the contract.


         10. What disclosures will I get from the Seller?

Disclosures in a Bank Owned Transaction are completely different from a traditional/private Real Estate Sale.  The Bank is only required to provide the Buyer with the Transfer Disclosure Statement (with Agent remarks only), Smoke Detector/Water Heater Disclosure, Lead-based Paint Disclosure, Agent’s Visual Inspection Disclosure, HOA Documents and Natural Hazard Disclosure.  All other required documents will be provided, but will not be signed by the Bank.  The Bank will not sign anything that is not legally required of them; completed inspections are not disclosed.


          11. Why do I have to get Pre-Approved through the Seller’s Lender when I am already Pre- Approved with the Lender of my choice? 

           Many banks will require the Buyer to get Pre-Approved with them as an additional layer of protection that you will still be able to close escrow, even if the financing with your lender falls through. Once you get Pre-Approved with the Seller’s Lender, you may obtain your financing with any lender you    choose.


          12. Will my Realtor have any direct contact with the Bank/Seller?

No, your Realtor will communicate directly with the Seller’s Realtor only, and will have no direct access to the Seller or Asset Manager.


The answers to these questions are to service as a guideline only, to help you gain a better understanding of what to expect during the Purchase of your Bank Owned Property.  Each transaction is different and each Bank has its own set of rules for dealing with each transaction.