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The first thing you should know about buying a San Diego REO is that you have greater negotiating leverage if the property has been on the market for a while.  When an REO first goes on the market, the bank may be unwilling to negotiate down on its asking price as it wants to get as much of what was owed on the original loan back as possible.  However, once a home or condo has sat too long on the market with few bites, a bank becomes more willing to take what it can get since its primary goal is to get the asset off the books and increase shareholder value.  Remember, banks don't want to be in the real estate business. So, here are some tips on how to negotiate with a bank when buying an REO.

Read also: What is the difference between a foreclosure and an REO?
 

1.       Only make offers on San Diego REOs that have been on the market for more than 30 days.

2.       If the bank rejects your offer, wait another 30 days and resubmit it.  Over time banks become more willing to take less.

3.       Hire your own attorney to review the bank's Purchase Contract.  Since most banks use their own attorney to write the Purchase Agreement, it will not favor you so you need a good real estate attorney to review it.

4.       Don't feel obligated to obtain your loan through the bank offering the property.  While they may ask you to submit a loan application to pre-qualify you for the purchase, you can still seek the loan from other banks with better rates.

5.       Since you will likely have to buy the home "as is," be sure to make your offer subject to a home inspection as some sellers strip assets from the home before the sale.

6.       Make sure you have an approval letter from your lender before you submit an offer that assures you your loan will not run into unexpected delays because the selling bank may charge additional fees if the closing date is delayed.

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