August 1, 2008
REOs are not the easiest transaction to work with. If you are a first time buyer trying to capitalize on the market or an investor, please, patients, patients, patients!
When dealing with bank REO (Real Estate Owned) property keep in mind the banks are instructing the realtors to leave the properties on the market even though they have received an offer, or in some cases multiple offers. They are trying to create a bidding war to drive their prices up, sometimes even more than list price! If your realtor comes to you and says “we have multiple offers and we need your biggest and best”, know they mean it. The banks have given permission for this and are trying to put all offers on a fair playing field by disclosing multiple offers. Once you have an accepted offer with the bank please beware they may still elect to leave the property active on the market for back up offers. This does not mean someone can step ahead of your accepted offer.
Also, be aware, the banks will take their sweet time, no matter what time limits are on your offer, you are expected to keep your time frames, and they are not!
Working with REOs is a poorly choreographed dance between your realtor and the bank with the buyer stuck in the middle not knowing whether to use their left foot or their right! Patients is the name of this dance!
By the way, the first time home buyer’s down payment assistance will be gone as of October 1, 2008!
This week the President signed H.R. 3221, Housing and Economic Recovery Act of 2008, into law. The bill contains a provision (SEC. 2113) which forbids FHA from insuring mortgages in which the borrower’s downpayment comes from a private downpayment assistance provider, beginning October 1, 2008. As of this date, the minimum downpayment will be increased from 3% to 3.5%.
Let’s hope they over turn this bill soon! If you are looking for a home or in the process of obtaining a loan with down payment assistance, you have until October 1st to receive mortgage approval.
