Helping your Clients Digest The Important Pillars of Bank Owned Properties
I've been in the REO Business for close to ten years. I started when I was 23 and my mom has been in the business for over 25 years. My knowledge in this sector has helped my buyers looking at bank owned properties tremendously. However before we go out searching I always sit them down to prepare them for the road ahead. There are many things one needs to know about lender owned properties.
Highest and Best
To understand this situation it is important that buyers know that they are negotiating with an asset manager whose has no emotions what so ever. An asset manager is nothing more then entity that's primary job is to get the most money out of the property for the bank. Many asset managers price these properties at a steal because there is a chance that they will receive multiple offers and drive the price of the property up. It is important that your clients have a firm "walk away" price it will help them during the highest and best process.
The interesting thing about counter offers on a bank owned property is that they can be verbal. This process can leave your clients in a very vulnerable situation. Make sure they understand that another buyer can swoop in with a better offer anytime. Even once an agreement has been made. Contracts on bank owned properties can go days or even weeks before they are actually signed and solidified. Even if your buyers have a signed agreement it is imperative in these transactions that they know it is in the bag yet and that another buyer can pull a sneak attack and come in with a better offer.
Understanding the Addendum is a key component that buyers must be able to digest. Standard addendums create an even playing field for the interest of the buyer and seller. However REO addendums alter this balance by favoring the lender.. REO addendums protect the lender by the language that is executed in them. Most of the language in these documents is non-negotiable so make sure your buyers are aware of this shift in power.