HUD Articles

Why do many REO Home Sales fail?

Sadly, many times, it is inexperience by 2 important parts of the equation – Buyer’s Realtors and Buyer’s Lenders

First and foremost, the REO selling agent can tell the buyer’s Realtor everything they need to know but are they listening? Some REO agents list the rules about what to do next. Are the Buyer’s Agents reading the provided information? The chance of success is severely diminished if they don’t.

Secondly and equally important, The Buyer’s Lender. Have they closed a transaction like yours before? Not all lenders are created equal. Ask your lender if they have closed on REO transactions and if not, you have a choice to make. These transactions are unique and require close attention to HUD guidelines regarding homes being sold “as-is” with no repairs prior to closing. This is the case with HUD as well as many REO properties.

Some issues seen from lenders and Buyer’s Realtors alike:

1. Do not understand repair escrows
2. Have specific lender overlays in regard to REO’s
3. Inexperienced and over confident or do not ask questions and do not listen or Communicate!

So, thirdly – pick someone with experience financing HUD and REO homes! PLEASE! These transactions can be tricky and the experience of a knowledgeable lender will make all the difference. The Seller’s agent will thank you and you will find you are successful and get a home that is generally well affordable within the market.