REO Offer Instructions and F.A.Q.

In order to make this transaction as smooth as possible, we are providing you with information so that you and your buyer are aware of what is involved in purchasing an REO property.

If you still have questions, please understand that you will get the fastest, most accurate response when you utilize email.

FAQ

"DO YOU HAVE ANY OFFERS?" / “Is the property still available”

Answering this question for every interested party has become difficult and we generally do not provide this information. Unless we have noted a property as Pending in the MLS, you still have an opportunity to submit an offer. Just because we have an offer it does not mean the offer is good – or that it will be accepted by the seller. Our job as the listing agent is to obtain as many offers as possible for our client. Answering this question may encourage somebody not to submit an offer.  Please submit offers until the status changes in the MLS.

In addition, do not ask listing agent for details regarding other offers on the property, including the price range. This is confidential information and all parties will be treated fairly.

Multiple Offers

If multiple offers are received on this property, you may receive a Multiple Offers notice in which your buyer would then get the opportunity to submit their highest and best offer. You are not guaranteed this opportunity; however, the seller may give you this last chance.  Multiple offer notices are sent via email so be sure to check for your client on a regular basis.

I.   OFFERS  

1. Submit the entire package as stated in agent remarks or offer may not be presented (per seller’s instructions). Complete package includes:

• Offer Worksheet  - *Please make sure the terms on your offer worksheet and the CAR contract match!  If not, the terms in the CAR contract will be used.

• CAR purchase agreement

• Agency Disclosure (Mandatory)

• Verification of funds (VOF) for all offers - AND - A verified pre-approval letter from a Direct Lender and NOT a Broker, complete with the lenders contact information for verification.

• Copy of the EMD payable to “_________ Title Company”

• Selling Agent please acknowledge that you have read and understand these instructions when submitting an offer or electronically signing this form below.

• Email your offer to info@athenspro.com (preferred) or fax to 1-800-660-0747. SENDING YOUR OFFER TO ANY OTHER FAX OR EMAIL WILL DELAY YOUR OFFER’S RECEIPT.  WE ARE NOT RESPONSIBLE FOR OFFERS OR COUNTERS SENT TO THE WRONG FAX AND NOT SUBMITTED IN TIME.   This is a web based fax system – just dial the number and press START.
   

A Note about Pre-Approvals and Financing...

Please DO NOT submit pre-approval letters conditioned upon the Underwriter’s approval of documentation. Deals fall through far too many times with Pre Approval letters where the Underwriter has not reviewed all of the Buyer’s personal documentation. The Underwriter’s review of Preliminary Title Report, Appraisal, and Purchase Contract should be the only conditions. We WILL verify with the Underwriter that they have conducted a complete review. If possible, you should also submit the loan approval from the actual bank – not the broker.

Additional tips to strengthen your offer:

• FHA Loans: If your buyer is utilizing FHA for financing, you must advise the listing agent.  Please be aware that many times they will not appraise due to the lenders strict guidelines. Please put a repair amount in Section 2(c)(2) of the CAR Purchase contract so it can be written into the offer.

• Please refrain (if possible) from submitting offers with 100% loan approvals…these are rarely happening in today’s market and more than likely will fall out of escrow, costing our seller both time and money, and possibly your buyers EM deposit!

·         • Do not make your loan contingent until funded. This is in essence a 30 day loan contingency removal, and the seller will most likely not feel confident in your offer – nor will they want to wait until the COE to find out that your buyer cannot perform!

2. There will be/are bank REO addendums and/or riders for this property that MUST be signed in order to have a valid contract. The addendums explain that this home is sold AS-IS with no representation implied or expressed. This document cannot be altered in any way.  NO repairs will be made by the seller.  If your buyer is uncomfortable signing an AS-IS addendum, do not have them make an offer on this property.  Please do your due diligence beforehand (i.e., inspections) and present your offer accordingly.

3. Addendums will be provided after verbal acceptance of your offer.

4. Allow several days for a response to all offers.  If the property is new to the market, the seller will most likely not make a decision on offers for at least one week in order to give the property fair exposure and allow time for offers to come in.  In order for the contract not to expire, we would suggest extending your expiration date out at least one week so that we do not have to write an Addendum extending the purchase expiration date.

II.   AFTER YOUR OFFER IS ACCEPTED:  

1. If your offer is accepted, it will be communicated verbally and bank addendums will be sent to you for signatures.  YOU HAVE 48 HOURS TO RETURN THE BANK ADDENDUMS OR THE BANK MAY CANCEL THEIR ACCEPTANCE OF YOUR OFFER.

2. Once we receive the bank’s addendums back from you, they are sent to the bank, along with your purchase contract, signed by the appropriate individuals, and returned back to us fully executed.  We will immediately forward a copy to you and/or your lender.  It is not helpful to continually call and/or email for the contract.  As soon as we get it in our hands it will be forwarded to you and/or your lender.

3. Please allow up to 7 days to receive the contract back from the seller.  Please communicate this to your buyer’s lender. An experienced lender knows the REO process and there are many things that can be done to underwrite your clients’ loan prior to receiving the contract back.  If needed, we can confirm with the lender that this is an REO sale, the offer was accepted and the contract is forthcoming.  DO NOT WAIT TO BEGIN YOUR LOAN PROCESS UNTIL YOU RECEIVE THE CONTRACT BACK – IT IS COMING, SO PLEASE BE PATIENT!

4. Again, the bank will not negotiate terms after your offer has been accepted, so negotiate all terms before your offer is accepted.

III.   INSPECTIONS, REPAIRS AND CONTINGENCY PERIODS  

1. Your contingency period begins after verbal acceptance.  It DOES NOT begin when the executed contract is returned.  Once you have been notified that the bank has accepted your offer, please order your inspections, appraisal and complete your loan process.  DO NOT WAIT to begin these processes until the executed contract comes back as it will cause a delay and possibly put you outside of your contingency removal period.  It will also delay closing escrow - and possibly cause your client to incur a per diem penalty for closing escrow late.

2. HOAs: If applicable, immediately call the HOA listed on the MLS and order HOA docs.  Normally, this would come from the seller, but the bank seller has no HOA information.  There may be a fee associated with ordering these docs.

3. IMPORTANT:  Contingencies are removed "passively" unless an extension is received and approved beforehand by the Seller. This means that if the contingency removal date entered on the Seller's Addendum has passed, the contingency is deemed to be removed.  Please do not wait until the date of removal to request an extension.  If you anticipate a delay, request the extension as soon as possible.

4. Most times the electrical and water are turned on at the property, but occasionally interior conditions don't permit (i.e., missing light fixtures, leaks, etc.).  If the power/water is not on at the time of your offer, please turn on the utilities in the buyer's name to conduct your inspections.

5. Home inspections are encouraged but are for informational purposes only, whether conducted by the potential buyer or the bank seller. On occasion, the bank will have a pest report on file, and if so, it will be noted in the MLS confidential remarks and emailed upon request. Seller has NO information regarding this property. This home was acquired through foreclosure. Seller will not pay for a survey or any inspections. Additional inspections are the responsibility of the buyer.  Property is sold AS IS.  The bank will not renegotiate terms after your offer has been accepted and ratified, in fact, they frown upon it. Please negotiate all terms before your offer is accepted, including any buyer credits.  It is even encouraged that you perform inspections prior to making an offer.  That way you know your position beforehand and we are one step ahead on the inspection contingency!

IV.   COMMISSIONS  

1. Seller has the right to pay commission based on list price minus concessions. Example: Purchase price is $300,000 with $9,000 closing cost paid by seller – Net $291,000.  Your commission will be based on the $291,000.

2. Seller may not pay a commission to any buyer that holds a real estate license or to an agent related to the principal – please ask beforehand.

V.  ESCROW/TITLE COMPANY  

1. Who chooses the Title Company? 

Like it or not, the bank chooses; period. (the Listing Agent has no say in the matter either - we have our favorite title companies too, so we are all in the same boat!) The bank chooses the title company due to the fact that they usually have significant amounts of title work done during the Foreclosure process. 

TITLE COMPANY CONTACT INFORMATION COMES WITH THE SIGNED DOCUMENTS FROM THE SELLER.  The Listing Agent DOES NOT HAVE this information prior to receiving the Sellers Addendums and/or executed contract package. Please remember we are waiting too and will forward the information as soon as it becomes available. 

Many times the title company is located out of area.  However, you may use any local branch of that title company to deliver your EM deposit.  In the case of not having a local branch, it can be sent by overnight delivery. We can also arrange to have a loan signing agent conveniently meet the buyer at their home or other agreed upon location to sign final docs.

Escrow Number: Please be aware that we will not have an escrow number to give you.  Once the title company receives your EM deposit and the executed contract, they will contact all parties with the escrow number. In the meantime, please simply note the property address on your EM deposit check.

2. Please deposit your EM Deposit into escrow within 48 hours.

VI.  OTHER...

This is a bank-owned / lender owned / REO property – this is not a SHORT SALE.

1.    Please use the standard CAR Residential Purchase Contract. (CAR Form RPA-CA) when submitting offers.

2.     Specify in the contract (page 1, 3A) whether this is an owner occupied or investor purchase.

3.    Please request any seller credits (including closing costs) on page 6, Item 25(E) of the CAR purchase contract.  The seller will not credit more than 3% in closing costs, so don’t ask.

4.     If you are requesting the bank to pay your buyer’s title insurance, it MUST be in your original offer.  DO NOT ask for this credit after your contract has been ratified.

5.     Please leave the Seller’s name blank on the contract or put “Owner of Record”

6.     Do NOT shorten the Seller’s time for submitting disclosures to 1 or 2 days.  Again, we are working with corporate sellers and it often takes time to obtain signatures.  Please leave as the standard 7 days.

7.     Seller will generally not pay for the Buyer’s Home Warranty and will counter this request out of the contract (via Addendum) in most cases.

8.     Please do not call and/or email daily to get status on offers –or- request that we contact the seller for the executed contract. 

1.     Re: Status: As soon as we are notified by the bank of an accepted offer, we will notify the chosen buyer.  If you would like to notified in case of a rejected offer, please make sure your email address is clear on page 8 of the CAR Purchase Contract (or on the Offer Worksheet), as notifications are sent via email.

2.     Re: Executed Contracts: Likewise, if you don’t have the executed contract, then neither do we. Please bear in mind that these are corporate sellers, and in addition to having their normal course of daily business, they have many bank owned properties to attend to.  The seller is working on it and we promise – we will send it over as soon as we receive it!

9.     Do NOT give the lockbox access code to your buyers.

10.  Property is priced with repairs needed already taken into consideration. They also have appraisals to support their asking price.

11.  There are to be no repairs made to the property or occupancy until the Close of Escrow.

12.  Disclosure signatures:  The seller does not sign each and every disclosure.  They will generally sign the CAR Purchase Contract, Agency Disclosures, NHD, Lead, Mold, Water Heater/Smoke Detector.  Please don’t bother asking for them, they will never come.  However, you should still make sure that the Buyer signs ALL Disclosures.

I have read and understand these instructions. I will inform my buyer and manage their expectations regarding the process of purchasing this REO property.

I agree by typing my name as my electronic signature, it is acknowledged and understood that it constitutes an acceptance of all the terms and conditions contained in these instructions and is valid and enforceable in accordance with the "Electronic Signatures in Global and National Commerce Act"

I have read, understand, and agree to all the terms, disclosures, and conditions of these instructions.

TYPE YOUR NAME, DRE NO. AND DATE AS YOUR ELECTRONIC SIGNATURE

DISCLAIMER: This information is being supplied to you as a "courtesy" only and is NOT to be construed as California Law or guidelines that you MUST adhere to for your offer to be submitted to the Lender/Seller of the property. However, if the Lender/Seller requires offers NOT to be submitted to them that fail to meet their criteria, then such offers WILL NOT BE SUBMITTED per the Lender/Seller’s request.