20 tips to writing REO offers.

Written by Carl Medford, Windermere Agent in Northern California

Representing buyers through a few REO transactions can provide an extensive education that they never told you about in your Realtor training classes! I lost count a long time ago of the numbers of REO offers our team has written. It’s in the hundreds. And we’ve landed lots of them. Along the way, we’ve learned some tips for succeeding in this CRAZY market place.

1. Don’t expect the REO listing agent to communicate with you. That means answering their phone, emails, carrier pigeons or visits to their office. They don’t want to talk to you or help you in any way. The sooner you figure this out, the easier it will be for you. Don’t like it? Get over it.

2. You will need to plan on writing your offer blind. Good luck figuring out if there are other offers, how many there are, what prices they may be at and so on. REO listing agents want you to write your highest and best offer right out of the gate.

3. Competent REO listing agents will provide Instructions for Writing an Offer. These differ with every bank and can be VERY frustrating. Exact instructions HAVE TO be followed, or your offer can be flat out rejected. Fill out EVERY associated document and have your buyers initial EVERY page, even if there’s no specific place to do so.

4. Write in REAL projected close of escrow dates. Give yourself at least 45 days in the current market. If you can close sooner, great. If you don’t close on time, your buyer will end up paying per-diem charges of up to $150.00 a day for being late to the closing party, regardless of who is causing the delay. Bank wants to shorten up to 21 days? Just say no.

5. Banks want to see 1% for the good faith deposit. Educate your buyers – a $500.00 check won’t cut it.

6. Ask for standard 17 days contingency time periods – they will probably be changed in the banks Addendum (Counter Proposal), but at least ask.

7. DO NOT ASK FOR ANY SECTION 1 REPAIRS!! Not only will they say no, but if you have an FHA loan, you will TOTALLY mess up your transaction. Leave the Section 1 fields blank.

8. DO NOT STATE ANYWHERE IN THE CONTRACT THAT YOU WILL BE ORDERING INSPECTIONS. You automatically have the right to do so and can do so at any time. However, in you have an FHA loan, anything in writing that says there may be Inspection Reports could scuttle your deal (see the point above). Pay for all inspections at the time of the inspections and DO NOT pay them out of escrow. Do not send them to the title company or the lender. I am NOT saying to hide them – they are a part of the discloures for the transaction.

9. Do not ask to use your own Title Company. It won’t happen. Don’t like it? Don’t write an offer. Think it might be a RESPA violation? Get over it. Ask for the bank to cover title and escrow fees. They just might do it. Then again, they might not. And DO NOT write the name of their recommended title company anywhere in the contract – they may use it to stick you with the fees (they’ll say YOU specified their title company). Just leave the company name fields blank.

10. Ask for a home warranty. They’ll probably counter it out, but sometimes they leave it in! Always ask – they can only say no. Your buyer will appreciate the effort.

11. Ask them to cover any and all applicable HOA fees. They might do it. Then again …

12. Ask them to cover County and City transfer taxes. And, as explained in the points above, they just might do it. And maybe not. Doesn’t hurt to ask. If they won’t, their Addendum will automatically counter it out. Some do. Some don’t. Ask.

13. Don’t ask for any personal property in your offer. Banks cannot convey personal property. This includes appliances. You can state, “All items as per the MLS.” Anything that’s in the property when it closes is a bonus!

14. Completely fill out the Liquidated Damages and Dispute Resolution sections. Make sure all parties sign and initial EVERY place required. They may sign them. They may counter them out in their Addendum. You do due diligence on your part, then they will do whatever they are going to do …

15. Write “PROPERTY TO BE PURCHASED AS-IS” into the contract. Usually on page 6, Section 25.

16. You can ask for closing cost credits from the seller. Specify the amount required and make it very clear. Keep in mind the bank is interested in net pricing, so set your offering price accordingly.

17. Make sure that all Documentation required by the listing agent is included.

• Offer docs
• Copy of the deposit check
• Pre-Approval letter
• Verification of Funds
• FICO Scores, etc.
• Addendums
• Transaction Cover Sheets
• Disclosures

EVERYTHING they ask for. Take time to make sure they are properly filled out, signed and initialed as required. Your offer will most likely be rejected if everything is not filled out perfectly and something they ask for is not included.

18. Email the offer to the REO listing agent. They want offers in email format because they need to upload them to the asset manager’s websites. Make it easy for them. Put all the signed docs together, scan and email them to the REO listing agent. USE THE ADDRESS THEY TELL YOU TO USE. If you don’t have a multi-page scanner to make this easy for you, it’s time to get one. You’ll also need a program to convert the docs into .pdf format. Scan everything at no more than 300 dpi in BLACK AND WHITE. You have to be able to email the docs – large files will jamb the listing agent’s box and may not get there at all.

19. ASK FOR CONFIRMATION OF RECEIPT! Include the words, PLEASE CONFIRM RECEIPT OF THIS OFFER in your email with the offer docs. If you are lucky, they will!! If not, bug them until they respond. Don’t EVER take for granted they have it.

20. Prepare to wait. For up to a week. And DON’T CALL!! You may end up with a very rude person telling you that they will notify you when they get a response to your offer. And then, don’t expect them to do so. Your only notification may be the listing going pending on the MLS. Which is a clue that your offer was rejected. Did I mention that many REO agents don’t want to communicate with you and can be very rude?

Seems like a lot of hassle?

May be, but it’s the main game in town right now, and if you want to be a player, you’d better figure out the rules and get on board.

Otherwise, you just end up on the sidelines while everyone else scores.