The main advantage of Bulk REO Purchase Procedures is the lack of red tape slowing down mainstream real estate sales. Bulk REO purchasing follows a simple, yet effective and well outlined procedure, a go-between between the Buyer, Escrow, Buyer’s bank and Broker of Records to obtain required information and satisfy sale conditions. The goal of bulk REO purchase procedure is to define the property, the buyer, the seller, sale price and fund information. The process requires completion and submission of Bank Letter, Confidentiality and Non-Circumvention Agreement, General Fee Agreement and Buyer Profile trough ten well defined steps:
•Step 1: Completing and transmitting of purchase bulk REO agreement. Buyer’s Mandate/Buyer sends a completed purchase bulk REO agreement to the Real Estate Company via email/fax/upload.
•Step 2: Transfer of purchase bulk REO agreement to Escrow.
The Real Estate Company transmits this purchase bulk REO agreement to Escrow and the Broker of Record.
•Step 3: Based on the received purchase bulk REO agreement Escrow quotes and transmits Buyer’s mandate/Buyer the request for a Bank Letter.
•Step 4: Buyer’s bank transmits the Bank Letter to Escrow.
•Step 5: Escrow Officer verifies the funds by contacting Buyer’s bank and, conditional to positive results, notifies the Broker of Record.
•Step 6: Broker of Record forwards the offer with the bank proof of funds for purchase bulk REO agreement to the REO bank, who puts it into queue to be sold to the highest bidder.
•Step 7: if Buyer’s bid is accepted, the selling REO Bank takes the next step by:
•Sending the tape to the Seller’s Agent for delivery to the buyer
•Blocking the tape in the Buyer’s name for a 3 day period.
•Step 8: Depending on the seller, the buyer is given an exclusive 48 hour period to examine the tape and decide if he/she wants to proceed in performing his due diligence.
Buyer that wishes to precede wires a deposit to Escrow’s banking coordinates. Deposit, when received, continues to block the tape for the buyer’s benefit.
•Step 9: To complete the sale by wiring Purchase Price as stated to Escrow for the bulk REO purchase procedure he/she has chosen, buyer has:
•(3) Banking days from the time he/she has wired the deposit for any order of $25 Million or less.
•(5) Banking days from the time he/she has wired the deposit for any order over $25 Million.
•Step 10: As the last step of bulk REO purchase procedure, the Escrow Officer arranges for Title Insurance, transfer documents, and all other forms necessary to close escrow. All payees must e-mail the Broker of Record their banking coordinates so their commission checks can be sent to them. Escrow closes and pays all concerned.
During proceedings Confidentiality and Non-Circumvention Agreement is singed and stamped by all parties. General Fee Agreement is completed and validated. Depending on the agreement, Buyer irrevocably instructs Escrow to release a small percentage of the selling price, payable in equal amounts to the Buyer’s Mandate (where applicable), Seller’s Representative/Mandate (where applicable) and to Real Estate company involved. For selling price percentage of 3% this means 1% to each of the three parties involved.
Is it possible to back out of the deal? Yes, there is a procedure that lets you back out gracefully. In cases where a Buyer does not wish to proceed with property acquisition, he/she are obliged to notify Escrow. Escrow will refund 90% of the deposit, with the non-refundable 10% used to liquidate damages. Following completion, bank makes the REOs available to the next highest bidder. Escrow notifies the Seller’s Representative, who in-turn notifies all payees, should the transaction fail to close.