Five Keys to a Successful REO Purchase

1. How well do you know your market? 2. What is a BPO and how do banks use them? 3. Loans, what are underwriters looking at? 4. Title work, who’s closes for the bank? 5. Closing date, are you ready? 1. Market analysis is important to the resale of your purchase and/or rental. We evaluate the market by looking at past current and future market expectations. We use MLS, tax records, personal and professional experiences, key census factors and strong national organizations that offer national trends. Appraisals and past sale prices are just not enough to determine financial success when considering an investment in REO or any property we show you. 2. A BPO according to TransUnion: “is used if a full appraisal is not required, the alternative valuation products are ideal. These solutions, including Broker Price Opinion (BPO), could reduce your current valuation costs by up to 75 percent and take several days off the process. Especially well-suited for use in collections and loss mitigation, the BPO of a residential property is typically conducted by local, licensed real estate professionals. The report combines information from a drive-by exterior examination, external data sources, previous sale data, property assessment data, recent comparable sales and current neighborhood listings, as well as a photograph of the subject property.” We provide over 1000 BPO evaluations per month. We use them everyday for banks and we will share this knowledge with you to help you evaluate your next investment purchase. The key points regarding BPO’s are: • Provides subject property verification • Determines current condition of subject exterior • Assesses neighborhood property trends • Determines typical marketing time • Summarizes and compares closed sales and competitive listings to subject property • Provides an estimated value for subject property containing either probable sales price or suggested list price 3. Loans and the lending process involve many complicated issues that if you know what the underwriters are looking for can mean the difference between a successful loan and a loan that never gets to the closing table. Each property must be evaluated individually and the best lending options change with ever new loan and new property. The most popular lending products are referred to as conventional and are processed into the standard lending boxes. With REO properties all of those lending options no longer are available. These properties usually require repairs and updates and traditional appraisals completed by “human” appraisers need to know what the loan is trying to accomplish for the buyer and the seller. Simply stated, correct and accurate information up front will help to eliminate lending problems because of “human” error or opinion. The most common tool we use for loans on REO properties are what we call a “rehabber loan”. These loans are designed to help the buyer’s acquire the property, pay for the needed improvements and have another, “end loan” ready for the remaining loan term or a new buyer. These loans are based on “ARV”, after repair value. All of our lending options are provider to our clients at our office, your office, local coffee shop or in your home at your chosen time and schedule. The options are creative and designed to fit most all levels of financial abilities and capabilities. Sampling of some of the key lending products and factors: A) Stated/stated loans to help self –employed and commissioned employees; B) Construction loans to rehab the property, up to 90% of the ARV or after repaired value; C) First time home buyers with limited credit; D) Credit scores down to 500 FICO rating; E) Non owner occupant buyers up to 100% Loan to value; F) IRA and HAS, tax free tools and products to help build for your retirement (Non-recourse lending resources). 4. Title work, do you know who you’re closer or closing company will be? Title work needs to involve the bank and the asset manager. The closer needs to know what they can and can not do to acquire free and clear title work. We work directly with banks and can assist the closing companies provide your title work as seamlessly as possible. Many of our transactions provide an owner’s title policy to our buyer’s at the expense of the seller or bank. This will provide peace of mind and assurance that your property is going to be your property as long as you so desire. Title issues involve many necessary records that are filed by state, city and county records individuals. Finding all the correct and needed documentation to close your loan can cause much confusion for the inexperienced. Filing all these same documents again after closing can cause the same problems. Working with MNREO, we have the needed experience to get your loan closed correctly and follow up to ensure your loan gets re-filed correctly. 5. Closing on time, Did you know that everyday past the date you stated in the purchase agreement you were willing to close on, could cost you up to $200.00 a day in penalties? Banks are not very understanding to your personal issues. Buying a REO property is a great opportunity to purchase properties a discount or wholesale pricing. However, those discounts have conditions. The most over looked condition is the closing date. We at MNREO will constantly review and update you along the process from finding the best deal and property, working out the loan, getting your repairs set up, reviewing the title and appraisal process and last closing on time…EVERY TIME.