Working With a Realtor to Buy a Bank Owned Property

 

by Brent Wilson

 

Your success in investing in bank-owned properties will depend to some extent on finding and working with a suitable Realtor.

It’s also wise to do some of your own research on local REOs (bank-owned property), whether it be via REO web sites, the local multilist (Realtor.com), or any other resources you can find.

Some Realtors are competent in dealing with REOs and will readily show you any listing, and some are not so competent. Some Realtors become reluctant to show very cheap houses, since the commissions are so low. It is critical that you find a Realtor who will show you EVERY house that might be suitable, no matter how cheap. Some Realtors also become reluctant to show some REOs because the lenders pay only a low commission, and they could receive a higher commission if they show a different house.

This sort of selective marketing by your Realtor will work against you at every step of the way. You need to be sure that the Realtor you work with understands up front that they have to show you everything that meets your guidelines, no matter how cheap. Let them know that you will be a repeat customer, so anything they don’t make on one transaction should be compensated for over time.

Some Realtors, even when they belong to the multilist, are reluctant to show the listings of other Realtors, since they don’t want to split their commissions. Working with this sort of Realtor is usually a waste of time, since their potential inventory is usually quite small.

When the REO market gets into high gear and a majority of houses sold are REOs in some areas, the conventional Realtor will either have to change or get out of the way. You should be sure to work only with a Realtor who has successfully adapted to the changed market. Many Realtors also don’t like to show properties which are very rough or in bad areas, but again, you have to see these places, since there are bargains buried among them. Sometimes the worst looking (but still well built) property is the best deal. This coming market will be so different from what the average Realtor has grown accustomed to that most conventional Realtors won’t learn how to operate successfully until several years have passed.

General Strategies

Two of the best sources of REO bargains, once foreclosures become more numerous, are new listings and price reductions.

Some lenders will begin at a low price to sell a property quickly, so some buried treasure can be found in the new listings.

Price reductions can also be a source of potential bargains. If a property has sat on the market too long, some lenders will slash the price quite a bit to move it, depending on circumstances.

Ask your Realtor to send you a daily or weekly list of price reductions and new listings in the areas that you are interested in, especially after the foreclosure activity picks up in your area. You need current information on these so you can be first in line for the real bargains.

As times goes on and the REO inventory mounts, it will become more and more of a numbers game. You won’t get all the places you make offers on, but you should get enough to make things work. Don’t get hung up on the places you miss, just keep in the game and look for the next one.

Be sure your Realtor has time to submit offers in a timely manner. A day or two in delay can cause you to lose a lot of good deals. Your deals will probably be smaller than their usual business (lower prices equals lower commissions) so it’s critical that your Realtor is service oriented, with an eye toward a long working relationship with you, rather than just how much money they can make on any one deal.

By the same token, be a good client, make solid offers, don’t waste your Realtor’s time, and do what you say you are going to do.

One thing that will help you above almost all else is the ability to size up a property quickly, to know if it meets your criteria. Work on this and learn how to quickly eliminate from consideration any properties that are unsuitable. When you do meet your Realtor, you’ll be able to walk through a place and know immediately whether you want to make an offer on it. This will save a lot of time on everybody’s part, and a lot more bargains will come your way.

 

Hope you enjoyed the article,

Matt Soares
TurneBiz.com
CompForLife.com

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