With the market so completely saturated with REO and foreclosure properties, many buyers and investors hold the misconception that they won’t meet any competition at the bidding table on most properties.  While this may be true of some properties in very poor condition, the market is still afire for those REO properties that are not in a state of total disrepair and if you want to be the winning bid, you have to know how to make the best offer.

To start you must know how to make a great REO offer.  You always hear that there is no negotiating in REO and this is true to a degree, but not 100% accurate.  Although you are not likely to go beyond a best and final offer with the banks, you can practice due diligence and give the best background and supporting documentation for your REO offer. 

Every buyer should have a REO property fully inspected by a professional home inspector before making any offers to the lender holding the property.  Bear in mind that the bank will not be paying for the repairs.  You can use the information from the home inspection regarding repairs to support your lower than asking REO offer.  This is especially true if the necessary repairs must be completed for a property to be habitable and you present accurate estimates on the costs of repairs from licensed contractors. 

Now, in order to take out the competition, you don’t need to have the highest bid, but you do have to have the cleanest financing.  Meaning an excellent credit score and pre-approved loan status with the lending bank will score big points over the other guys.  Some lenders do offer financing on their own bank owned properties, but check with the listing real estate agent to learn as much as you can about the loan program being offered. 

Today’s REO properties are moving and buyers are realizing savings of well over 30% thanks to the market saturation of distressed properties.  Yes banks are eager to unload these troubling assets, but they are not giving them away.  Making an offer that is 20% below asking price on an REO is a completely acceptable; just make sure your financing is clear to winner over the competition.