REO Negotiation and Closing Procedures

Banks have internal valuation models—offers significantly below their BPO are typically rejected without counter. Start at 15-25% below asking and move in 3-5% increments. Leverage property condition issues documented during inspection. Emphasize your closing speed and certainty. For properties listed 90+ days, banks become more flexible. Multiple offers on multiple properties increase your statistical chance of acceptance.

REO closings have specific characteristics: the bank uses their own addendum with specific terms and conditions, the property is sold "as-is" (the bank makes no representations about condition), title insurance is essential (request the bank pay for the owner's policy as a negotiation point), and the bank's attorney may need 2-4 weeks to process closing documents. Plan for a 30-45 day closing timeline even with cash offers.

When negotiating bulk purchases: request a portfolio discount (typically 5-15% beyond individual property discounts), negotiate a due diligence period for all properties (30-60 days), include a property substitution clause allowing you to remove properties that fail inspection (up to 10-20% of the portfolio), and arrange for a single closing to reduce transaction costs. Bulk purchases require pre-arranged financing (hard money, private money, or partnership capital) since conventional lenders typically will not finance bulk acquisitions.