Lessons learned in (attempt at) buying an REO

Posted by taewoo on November 19, 2008 Leave a comment (0) Go to comments

(REO = bank owned property that failed to sell at auction after property foreclosed)

1. ALWAYS get local team members (i.e. lender and realtor especially)

2. If the bank disagrees with the appraisal you got, they will ask for another. Put a clause saying that the seller will pay for ALL additional appraisals if needed.

3. Never pay for points or discount. They get paid through the mortgage yield spread. Make sure it does NOT exceed 1.375%. Next time, I would ask for 1%.

4. Never put more than $1000 in deposit. REO deals can get nasty so if you back out or can’t close the deal, no big deal.

5. Get a realtor that has thick skin. Most real estate realtors and brokers are bunch of turds. Don’t expect them to think, but at least train them to fight for you.

I am so mad at myself.