So you’d like to buy a Las Vegas bank owned property?
You might have watched the late-night infomercials and you’re ready to do the bank “a favor” and take a problem off their hands. You even might expect to make “a killing” on the Las Vegas bank owned property in the process.  This all sounds great on paper, and if you do your homework it might just happen.  Here’s some facts you should be aware of.

REO vs. Foreclosure
An REO (Real Estate Owned) is a property that goes back to the mortgage company after an unsuccessful foreclosure auction. You see, most foreclosure auctions do not even result in bids these days because property prices have dropped so much, the opening bid is well above the current market price.  Usually the opening bid on foreclosures at the trustee sale is somewhere between what’s owed to the bank and what the last open market sale price was.  If there was enough equity in the property to satisfy the loan, why wouldn’t the owner have sold the property and paid off the bank?  That is why the property ended up at a foreclosure or trustee sale.

Foreclosure sales begin with a minimum bid that includes the loan balance, any accrued interest, plus attorney’s fees and any costs association with the foreclosure process. In order to bid on a bank owned property at a foreclosure auction, you must have a cashier’s check in your hand for the full amount of your bid.  If you offer the winning bid, you receive the property in “as is” condition, which may include someone still living in the property.  There may also be other liens against the property.  So it’s very important to do your homework before bidding on a foreclosed property.

Since what is owed to the bank for the outstanding loan is almost always more than what the property is worth, very few foreclosure auctions result in a successful sale.  When this occurs the property “reverts” bank to the bank and becomes a “real estate owned” or REO, property.

REO Properties For Sale in Las Vegas
Now that the bank owns the property and the mortgage loan no longer exists, the bank will handle the eviction, if necessary, and may do some repairs.  They will also negotiate with the IRS for removal of tax liens and pay off any outstanding homeowner’s association dues.  As a purchaser of an REO property, the buyer will receive a title insurance policy and the opportunity to investigate the property.

When you are buying a bank owned property, it’s pretty much like buying from a private party in terms of the paperwork and the escrow process.  The one major difference is the disclosure process is pretty much non-existent.  Since the bank never lived in the property, they have no way of answering the bulk of the questions that are part of the normal disclosure process.

A bank owned property may or may not be a great bargain.  The most important factor in determining this is how many other buyers are interested in the REO property.  Do your homework before making an offer on a bank owned property and consult a Realtor who is very familiar with purchasing REOs and the area the home is in.  Make sure that the price you pay (if you’re successful) is comparable to other homes in the neighborhood that are similar.

Consider the costs of renovation, including time to complete them. Don’t get caught up in a ‘bidding war’ and pay over market value. It’s an old myth that “foreclosures” are a bargain.  Not all of them are.  Especially if they turn into a money pit once you take ownership.

How Banks Sell REO’s in Las Vegas
Each bank/lender works a little differently when listing their bank owned properties, but they all have similar goals.  They want to get the best price possible and have no interest in “dumping” real estate cheaply. Generally, banks have an entire department set up to manage their bank owned property inventory.

Once you make an offer to purchase a bank owned property, banks generally present a “counter-offer.” It may be at a higher price than you expect, but they have to demonstrate to investors, shareholders and auditors that they attempted to get the highest price possible. You should plan to counter the counter-offer.

Your offer or counter-offer will probably have to be reviewed and approved by several individuals and companies. Even once an offer is accepted, the bank may insert wording like “..subject to corporate approval with 5 days.”

See our article about Tips on How To Write Your REO Offer.

Property Condition

Banks always want to sell a property in “as is” condition. Most will provide a Section 1 pest certification, but not unless you include it in your offer and negotiate the point. They will allow you to get all the inspections you want (at your expense), but they may not agree to do any repairs.

Your offer should include an inspection contingency period that allows you to terminate the sale if the inspections reveal unanticipated damages that the bank will not correct.

Even though you agreed to “as is,” always give the bank another opportunity to make repairs or give you a credit after you’ve completed your inspections. Sometimes they’ll re-negotiate to save the transaction instead of putting the property back on the market, but don’t take it for granted.

Making an Offer
Before making an offer, have your agent contact the the listing agent and ask the following:

* Are there any inspection reports?
* What work has the bank agreed to?
* Is there a special “as is” form?
* How long does it take the bank to accept an offer?
* How does your agent deliver the offer?

Offers are usually FAXED to the bank. There is no formal presentation. Keep in mind: nothing happens evenings and weekends (banks are closed).

Since there is no face-to-face presentation to the bank, provide the listing agent with a pre-qualification or better yet, a pre-approval letter and buyer biography. Make your offer easy to accept.

Hopefully these tips will manage your expectations. Remember that REO’s sell at pretty close to full market value and are not the deals presented on late night television.

Buying Bank Owned Properties (REO) is a post from: Turner Realty Las Vegas | REO Specialists | Forclosure Market Realtors

A short sale occurs when a property is sold and the sales proceeds do not fully pay off the loan or loans on the property and one or more lenders accept a discounted pay off and allow the sale to close escrow.  This means the lender(s) agrees to release the lien that is secured to the property upon receipt of less money than is actually owed.

As foreclosure rates hit record levels, more sellers are turning to short sales as a way to avoid foreclosure, and recently more banks are agreeing to the short sales.  The reason for this is that the short sale doesn’t affect the seller’s credit as badly as a foreclosure and the short sale can be less expensive for the bank.  When a bank takes a property back, it costs them tens of thousands of dollars to process the repossession and the time it takes them to get the property back on the market can be as long as 6 months.  During this period, the market value of the property can continue to decrease and the carrying costs associated with having the property in inventory prevents the banks from being able to lend that amount of money-banks aren’t in the business of owning real estate, they are in the business of lending money.

Sounds good right?  Well, sellers need to know that a short sale will affect their credit, though not as much as a foreclosure. You’ll need to talk with a tax attorney to determine the best option.  Also, lenders may only agree to a short sale if the seller is many payments behind and has received a default notice.   This is not always the case, and we are by no means encouraging you to stop making your mortgage payment.  If the short sale goes through, however, then the benefits can include your lender accepting the discounted payoff and you being free and clear, you have not out of pocket costs as the lender pays all sales costs, your credit record is protected from a foreclosure, and you can move forward with your life without have the burden of the mortgage you couldn’t afford.

We do encourage you to exhaust all other options available before pursuing a short sale.  Most of these alternatives can result in you retaining your house.  Your options can include renegotiating the terms of the existing loan or loans, refinancing the house with a different lender, and talking to a consumer credit counseling service if your other debt is prohibiting you from making your mortgage payment.

For buyers, short sales offer an opportunity to get a great property at a relative discount.  Many agents in today’s market refuse to show short sale listings to their clients because of the uncertainty involved.  So this leads to less competition when making an offer reducing the chance that the price gets bid up.

Another advantage of short sales when compare to buying bank owned properties is that you are buying the home from the previous owner.  So the disclosure period which is standard for the normal real estate transactions will apply.  This will allow the buyer to question the current owner about the property.  In bank owned sales, the seller is a bank who has hundreds if not thousands of properties on their books and all they know about them is how much money they are losing on them.  They have no idea if a tree fell on the house last year or if the basement floods in a storm.

There are no guarantees for either the buyer or seller in a short sale.  Usually the negotiations with the lender(s) can only begin when an offer is received, and the bank may or may not agree to it.  For the buyer, a great deal of patience will be required after submitting your offer as the lender(s) approval process may take a month or more.

Virtually every step in the Short Sale process requires experience and expertise if the desired result is to be achieved. When it comes to working with a Buyer to find the right Short Sale property our expertise is critical in determining the viability of the Short Sale file – will the file be approved?   We specialize in working with Buyers and Sellers to put mutually beneficial Short Sales transactions together. We get Short Sale properties sold for Sellers, we help Buyers find the right Short Sale and we get Short Sale files approved by mortgage lenders.

Short Sales Require An Experienced Realtor is a post from: Turner Realty Las Vegas | REO Specialists | Forclosure Market Realtors

Lots of savvy home buyers in the Las Vegas real estate market want to hit the jackpot and buy an REO property.  There certainly are many to choose from, and many of them are often under-priced. When banks price Las Vegas REOs under the comparable sales, multiple offers are often the response. This means you could be up against stiff competition for that bank-owned property you are interested in.

It’s not unusual for some REO foreclosures in Las Vegas to receive 15 or 20 offers. Sometimes the bank will throw out all but two offers and then ask the selected buyers to resubmit what is called “Highest and Final” offer. Sometimes the bank simply accepts the best offer at off-the-bat.

If you’re wondering how you can make your offer on that Las Vegas REO shine above all the rest and be the winning offer, here are a few tips to help you select the right price and terms:

1. Get the Property History of the Las Vegas REO Property

Ask your agent to find out the bank’s purchase price on the Trustee’s Deed or Sheriff’s Sale. Generally, it is noted on the document itself, which you can get from the tax rolls or a title company. Compare that price to the price the bank is asking.

Look at the amount of loans that were once secured to the property. Somewhere between the original mortgage balance(s) and the foreclosure sale price is the amount the bank will accept, if the home is under-priced.

2. Determine Comparable Sales for the Las Vegas REO Property

In many cases, the list price has little bearing on the value of the home. The market value carries the most weight. If you are up against competing offers, other buyers will offer more than list price.

• Look at the last three months of comparable sales, a mini CMA, for that neighborhood to determine how much this REO property is worth. Try to use only those homes that most closely match the REO regarding square footage, number of bedrooms, baths, amenities and condition.
• Look at the pending sales.  Ask your agent to call the listing agents of those pending sales to try to find out the accepted offer price. Some will share that information and some will not.
• Look at the active listings. Those are most likely the listings other buyers will use to formulate a price because they are the only homes those buyers actually tour.

3. Analyze Listing Agent’s REO Solds

Most REO agents work for one or two banks. Some listing agents are exclusive listing agents for Las Vegas REOs, and they do not list any other type of property. Since REO agents deal in volume, they typically apply the same pricing principles to all their REO listings.

• Ask your agent to look up the listing agent in MLS.
• Run a search using that listing agent’s name to find the last three to six months of that agent’s listings.
• Pull the history of those listings to determine the list-price to sales-price ratio. If most of those listings are selling for, say, 5% over list price, then you may need to offer 6% over list price, and vice versa.

4. Ask About Number of Offers Received for the Las Vegas REO Property

If there are no offers on the REO home, you can probably offer less than list price and get your offer accepted. However, if there are more than two offers, you will most likely need to offer above the asking price.

If there are 20 offers, bear in mind that some of those offers might be all cash. Banks like all cash offers. If you are obtaining financing, then you may need to increase the price on your offer to be considered.

5. Submit Preapproval Letter

It goes without saying that you do not want a prequal letter. You want a preapproval letter.  Get preapproved from your choice of lender in advance.

Moreover, get preapproved by the lender who owns the property. Do not expect to use this lender for your loan, but submit the prepproval letter from this lender, along with the letter from your own lender. Banks don’t trust other lender preapprovals but trust their own departments.

6. Don’t Ask the REO Bank to Pay for Repairs / Inspections

Sometimes banks will pay for repairs, but typically will not agree to do so at the offer stage. If there are problems found during a home inspection, renegotiate after your offer has been accepted.

7. Shorten the Inspection Period

If other buyers ask for 17 days, for example, to conduct inspections, and you ask for 10, you will be deemed the more serious buyer.

8. Offer to Split Fees wit the REO bank

Some banks will not pay transfer fees, for example. If the buyer offers to split those fees, the bank will feel more amenable to accepting the offer. Same thing for escrow fees.

Many banks negotiate discount fees for title insurance. If the bank will pay for the owner’s policy, the ALTA policy might cost a bit more. But it’s still a good idea to let the bank choose title if you want your offer accepted.

Consider the Appraisal Consequences

If you offer over list price, bear in mind that the appraisal will need to substantiate your purchase price. If you find yourself dealing with a low appraisal, you have options, so don’t despair. Remember, the bank will most likely run into this problem with the next buyer who obtains financing.

Most of all, when buying a Las Vegas REO property choose an agent to represent you that has lots of experience buying and selling REOs in the Las Vegas real estate market.

Buying A Las Vegas REO Property is a post from: Turner Realty Las Vegas | REO Specialists | Forclosure Market Realtors