Also, regular loans may be used to buy short sales and even REO property. It can vary from lender to lender. But, of course, if you have stacks of cash stashed under mattress, it may not hurt to bring it out and blow off the dust. Cash offers seem to have a way of catching lenders attention!

And just to reiterate what Ron said – lenders don’t want to do repairs in these kinds of sales. Make your offer as clean and easy as possible for the bank and your offer is much more likely to get serious consideration.

You do not necessarily have to work with an REO or short-sale specialist (there is no license qualification, BTW) to buy a distress property. Most bank properties are listed in the MLS. There isn’t much in the way of ’shadow’ inventory in this market.

‘Traditional’ agents like Jody and me show properties in all forms of ownership and condition. Short sale homes are the trickiest because your offer is subject to lender approval of transaction. The list price is one put forward by the listing agent in hopes of getting a quick offer, starting the conversation with the bank, and providing relief to the homeowner prior to foreclosure.

You make your offer to the homeowner, they approve it, then send it to the bank along with their hardship file for final approval. This process usually takes several weeks, even months.

REO properties are typically easier to purchase since the price is set by the bank and answers are usually pretty quick.

Most ‘distress’ sale properties are in as-is condition. Banks will not do much in the way of repairs. Short sale owners often don’t have the cash to get repairs done. Some will be cash-only due to structural or condition issues. I had one that developed mold in the basement while we were waiting to hear back from the bank on our offer. They offered another $7,000 discount to entice us to take it as-is.

While offers are written on ’standard’ Oregon contract forms, the banks will often come back with their own addendums, citing additional terms and conditions, limiting some of your typical timeframes for inspections and other contingencies.

I’ll try to circle back with some additional resources.

Question for Jody, Ron: I read somewhere that if a buyer were interested in a bank-owned or foreclosure home, that the buyer would need to contact an agent that specializes and is licensed to represent REO homes. Is this the case, or can the buyer use the traditional real-estate agent ? I’m new to the bank-owned market, and I’m hearing that buyers need to go through ’special channels’ in order to get access to REO listings/properties etc. Can you please point me to a resource that explains how an interested buyer like me could take advantage of bank-owned, foreclosed, or short sale properties that are in the market right now ?

Also, do these homes qualify for a standard mortgage at the current market rates, or does a buyer need to pay cash for these homes ? Are there any ‘gotchas’ to financing a purchase of an REO ?

Thanks
dj.