FAQ Foreclosures

Information You Should know - Before and While You Buy a Bank Owned Property/REO

Buying a house from a bank doesn’t work the same way that buying a house from a private party would work. But if you know the differences, a bank owned property is an excellent opportunity for most buyers. The following information and answers to frequently asked questions will help you understand what is involved before and during the purchase of a bank owned home.

Are Short Sales and REO’s the same?
REO means Real Estate owned, and is another way to refer to a bank owned property.
A bank owned property is property that the bank has taken back through foreclosure. Sometimes a seller who cannot afford or is behind on his payments will attempt to sell his house before it goes into foreclosure. In order for this to be done, you have negotiate with the bank to accept less than what is owed on the property, and this is a short sale. The information provided here is for purchasing an REO, not a short sale, which is completely different.

Exempt From Disclosure
Whomever sells a house in Virginia, by law they have to give the buyer a Disclosure Statement. This document describes what is included with the house, what is broken, and different legal and environmental disclosures. The seller must tell you about any defects he knows about, especially when they are hidden and they may not be visual to you. The seller might be held liable for defects that appear later when they are not disclosed before you bought the house.

The one exception to this law is a REO property. Banks are and will be exempt from giving you a Disclosure Statement. For this reason it is absolutely necessary that you do a thorough inspection with a licensed and bonded contractor before purchasing any REO/bank owned property.

Verbal Counters
After the initial offer is made and submitted in writing, counter offers are made verbally (via email) until an agreement is reached. This is an extremely slow process because other factors play in such as, the bank may be in a different time zone, or the responsible people are in meetings. It could be many days of countering verbally before a final agreement is signed by all parties. During this time, there is the possibility that another offer could possibly be submitted and may be better than your offer and the bank may accept it. This usually happens if negotiations stretch over many days or a weekend because that is when more prospective buyers are out looking. The best scenario is to try to reach contractual agreement with the least amount of counters. If you are extremely eager to get the property, bring your strongest and best offer quickly!

What type of deposit should I expect?
A bank might require a higher earnest money deposit than a private party would require. You should expect to write a check for at least $500 or more when you are making an offer on an REO property.

Why do I have to get two preapproval letters?
Some banks might require you to get pre-approved with their institution within a few days of accepting your offer. They want to cut their losses on the property by creating a new loan on it, or ensure that you are well-qualified for the purchase. Even if you choose to get the loan somewhere else you will need to go through the loan application process with their institution. While they can ask you to apply with them, they cannot tell you where to get a loan. That choice is entirely up to you.

When the Bank Chooses Settlement Services
The banks will strongly encourage you to use their settlement and title company. The reason for this is that they have previously negotiated fees with these companies, and usually will offer discounts and other assistance to you as the buyer. While you are not required by VA law, it is recommended you use their settlement company if at all possible. Also, a lot of times the settlement officers are so overwhelmed with business that the real estate agent has to assist in getting the property closed. For this reason, it is very important that you choose a REALTOR who is willing do the extra work needed to you get the house you want.

What happens when the contract is “Not The Usual Contract”
The bank will usually require their contract be used for final sales transaction, and not use the usual local REIN contract. Usually, they will accept our standard contract and then add their contract “addendum” when agreeable terms have been reached - this is just the contract written in their own terminology. It is very important that your agent pay close attention and read this form thoroughly to make sure your interests are protected.

What does Multiple Offer Situation mean?
There are times that a foreclosure home is priced well and several buyers may put offers on the same property. When this happens all buyers will be notified by the listing agent and they will be asked to submit their highest and best offers. Most times there will be a time limit for when these offers have to be communicated back to the listing agent. At the time that all offers are received, within the time limit set by the seller, they will then be presented to the seller at that time. The seller will then make a decision on which offer he/she deems to be the best overall offer, and will then finalize negotiations with this buyer on an individual basis. The bank will never be under any obligation to give any party an opportunity to beat the other offers regardless of how long your offer was in negotiation before other offers came in. This is why it’s so very important to bring your strongest offer and immediately reach an acceptance in the shortest amount of negotiation time possible.

What does REO stand for/mean?
Real Estate Owned.

Are any of these properties short-sale, auction or VA owned properties?
NO. These are REO properties, on all of them, the foreclosure has been completed, and the property is currently for sale by the bank.

Is it possible to get the property so that I can rent/lease/rent-to-own?
NO. All the properties are strictly for purchase only. The Sellers will not entertain rental contracts at this time.

How long does it usually to get a response from the Seller?
Responses are usually received within 3-5 days sometimes less. However, some responses can take anywhere from 3 days up to 4 weeks. Unfortunately a listing agent does not have the ability to affect Seller’s response time.

Is it possible to get a faster response from the seller?
NO.

Is a survey/plat/inspection of the property available?
NO. The seller does not have a survey/plat/inspection of the property

Do you know the specifics about the property condition/Can you answer questions about the property condition/History?
NO. Since the property was acquired by the Seller through a foreclosure. Neither the Seller nor the listing Agent has any specific information of the property history/condition.

On a home sale an the contract be contingent?
NO.

Is early possession allowed?
NO.

Are estimates or repairs allowed by the seller prior to closing?
Yes, usually. You will need to include your request in a contract (or submit addendum request if you are already in a contract).

Are verbal offers accepted?
NO. The Seller requires Preapproval/POF info & EMD copy, no acceptions. After the initial offer, most negotiations can be done verbally (through email) until acceptance when final addenda are issued.

Will the Seller turn on the utilities prior to contract so inspections can be done?
Yes, in most instances the Seller is willing to accommodate, if not encourage, home inspections to be completed before the contract is ratified. Make sure you contact the Listing Agent if you want to schedule any inspections prior to contract. (water services will NOT be started when a property is vacant. Please get in touch with your inspector to insure they have a water key that they may turn on water for inspection purposes only.)

Should the contract have personal property/fixtures to convey written in?
NO. Since it is a foreclosure, the Seller has no personal property and cannot guarantee the condition/conveyance of any items currently at the property. (The property is intended to convey as-is. Unless stated otherwise, any fixtures/appliances currently at the property are part of the as-is condition.)

Do I have a choice to use the Seller’s closing company?
NO. Virginia law states that Buyers may use the settlement agent of their choice. We recommend using the same settlement agent as the Seller, if it is possible. It will expedite the process because the company is familiar with REO transactions, and sometimes there are usually additional discounts and assistance available for you.

Our BPO Specialists can prepare Same-Day BPOs or Rush Orders are accepted and fulfilled within hours of receipt of the order. Thoughtful comments, attention to all details associated with the property, comparable sales, and knowledge of the price trends are always communicated to exceed client’s expectations on every BPO we submit.

Our goal with every BPO is to provide it to the client ahead of any scheduled deadline, with more information than needed to support value, and with more digital photos and comments than required; ideally we will paint a picture of why the property is valued according to the BPO – revisions or corrections are almost never needed.

Our BPO Price to Actual Sales Price is currently 99.1%, and we place a great deal of emphasis on giving each client an expert evaluation of value. Below is an example of the work we will put into your REO purchase.

Pre-Possession Services:	Post-Possession Services:	Real Estate Brokerage:
Broker Price Opinions	Secure The Property	San Diego Board Of Realtors Member - MLS
Full Comparative Market Analysis	Re-Key All Exterior Locks	Internet Marketing Campaign - 52 Largest Search Engines
Multiple Digital Photographs	Lawn Maintenance	Complete Video Marketing Package - Realtor.com Select Advertising
Occupancy Verification	Debris and Trash Removal	Activity Reports - Weekly, Bi-weekly, or Monthly
Loss Mitigation	Written Interior and Exterior Repair Estimates	Closing Coordination
Cash-for-keys	Before and After Digital Photos Of Repairs	Common Interest Association Coordination
Evictions	Utility Turn-On Coordination	Escrow Reporting / Full Disclosure Support

We Offer:
• Comprehensive BPO Services for all types of property (residential, commercial, retail, apartments, and mixed-use) - Same-Day Service Available!

• Fully Paperless Office - all documents, photos, and forms are handled via Adobe Acrobat (.pdf) Files, and emailed to Asset Managers, or Faxed upon request.

• We maintain a complete staff of 10 buyers agents, 2 transaction coordinators, 2 licensed contractors, 5 reo agents, 1 full time courier, and 2 attorneys on retainer.

• Our services are available throughout Hampton Roads , Virginia Beach area.

• We are fully automated and handle everything from BPOs to Securing The Property, Utility Transfer, Trash Out, Repairs, Construction Supervision, Listing, Marketing, Escrow Coordination, and Sales.

• We have a Single Point Of Contact for all REO and Asset Managers - you speak to one person, and get answers immediately.

• All assets are treated on a unique basis, based on the criteria of the REO and Asset Manager - we listen and respond to your needs.

Our Experience:
• Over 20 Years Of Combined Real Estate And REO Experience.

• We work with over 30 national firms and multiple REO / Asset Managers within those firms - references available upon request.
We are currently handling over 75 properties Listed for Sale or In Escrow.