Help! Bank want FMV for REO - Posted by Kevin(OK)

Posted by Kevin(OK) on October 28, 1998 at 09:34:18:

Thank you all for you replies. Bud, I am looking at a foreclosure list now and I see nothing that would tell me which banks are FHA and which ones are not. What should I be looking for? Also, I guess I must have missed the REO discussion, if you could outline the topics for me I would appreciate it. Thanks Bud.


Help! Bank want FMV for REO - Posted by Kevin(OK)

Posted by Kevin(OK) on October 27, 1998 at 18:11:16:

This is my first time trying to deal with REO’s. The house’s FMV is 93K. The lady I talked to at the bank says “we will not accept a bid under $90K because that is what we are owed”. I said “how can you be owed that much, this is a 1987 loan for $80K”. She said “because of late fees, legal fees, accrued interest, etc., and since this is an FHA loan, HUD will pay us for all we are owed”. If this is true for all FHA loans, do I need to look at conventional lenders only for REO’s? Any advise on REO’s would be greatly appreciated.



Re: Help! Bank want FMV for REO - Posted by Millie I.

Posted by Millie I. on October 27, 1998 at 23:41:22:


Banks will always start high and try to get every cent back plus a little profit if possible, especially if the property is in good condition.

If the original owner paid a low down payment, and lost the house a couple years later, there is hardly any equity accumulated on the house. By the time they are foreclosed, they may be a few months behind in payments and late penalties. Then there are the legal costs for foreclosure, etc. that could easily run up a $15K to $25K bill. In short, a REO could have an asking price above the fair market value. I’ve seen it myself. They do that sometimes even when the property is trashed. Most of the time the decision makers never saw the property. They decide on the asking price based on how much the bank has to recoup from the property, and what the comps tell them they can get for a house of similiar size.

Almost every REO I encounter start near FMV, if they don’t sell in 3 months, they usually start to drop the price gradually. Be patient and play the watching game. They may come down to the price you want, OR, another buyer may jump in and steal it from you before the price ever get to your desired range.

Watch and wait is the key, but you have to jump in right away if it ever comes within your range, there may be 50 other investor watching too. A cash investor has a better edge than one that requires the seller to wait for a loan to be processed. Be pre-qualified at least if you can’t do cash deals.

Millie I.

Re: Help! Bank want FMV for REO - Posted by Bud Branstetter

Posted by Bud Branstetter on October 27, 1998 at 20:57:09:


If your going to run REO’s look at a foreclosure list to see which ones are not government insured loans. A few weeks back there was a discussion on tracking banks ,their fiscal years and ratios or %non performing. Use that type of info to determine what bank and or property you want to follow.

Re: Help! Bank want FMV for REO - Posted by phil fernandez

Posted by phil fernandez on October 27, 1998 at 18:20:58:


I deal with bank REO’s all the time. What you need here is patience. No sense arguing with the woman. She’s only getting paid a salary from the bank. What you need to do is track this property for awhile. Maybe 4 or 6 months. At that time, when it has not sold, approach the women at the bank again.

I have bought REO bank properties that I had to wait one to two yrs before the light went on in the bank REO person’s head. Gee maybe this is all we will be able to get for the property. Do not let a bank employee influenze your offering price. If you exhibit some patience you will get some good deals. Don’t be afraid to contact the bank REO person once a month.