Ah, the big, bad bank! Realtors and buyers tremble in fear and bow down to the bank’s dominance while meekly accepting any and all terms the bank sends their way.

The numbers don’t lie, if you’re a buyer in today’s market, it’s quite likely you’ll run across at least a handful of REOs, bank owned properties. While most agents and savvy buyers understand that REOs often represent value and know that deals are to be had, they also seem to give in far too easily and let the banks have their way when it comes to terms. Why? I understand that working with a bank can be intimidating and I certainly understand, from personal experience, that the infamous Addendum A, some version of which almost always accompanies an REO acceptance, is nine pages of frightening legaleze, complete with some terrifying language about essentially waving all your rights.  Ugh.

Having said that, it’s important for buyers (and brokers!) to understand that Addendum A is nothing more than a fancy counter offer.  The moment the bank accepts the buyer’s offer, but then sends Addendum A changing many of the terms, that’s nothing more than a counter offer.  A counter offer?  Great, that’s something we as brokers are quite used to working with.  Once you lift the veil of mystery and realize that the bank is simply trying to protect its own interests, it becomes much easier to remember that we as brokers need to jump in and protect our buyers’ interests.  It’s not so hard to do, you just have to push back.

By the way, this entire mind dump comes from comes personal experience, both as a buyers’ agent representing clients in REO purchases and now as a buyer of an REO myself.  I’m currently in the middle of negotiations with an ever so lovely bank to purchase one of their properties in buyers’  market Heaven…Bend, Oregon.  Since I live three hours away and since I’m not particularly familiar with the market, I’m using a local agent to represent me in the purchase.  Unfortunately, my agent, while quite friendly and professional in demeanor, appears to have been afflicted by bank phobia. She gave my wife a series of questionable advice regarding making the purchase (including timing, opening offer price, counter offer negotiations, inspections and repairs, etc.), all of which essentially said, “If you want the property, you need to give the bank what they want and concede to their wishes.”  She even went so far as to say, “I don’t know why you need extra time, you’ll either like the house and buy it or you won’t and you won’t,” when we wanted to counter the bank for a longer inspection period.  Luckily I’m accustomed to working with banks and I had her draft a counter offer expressing the terms my wife and I wished to have.  She did it, but only after telling us, “I’m just trying to save you some hassle.  I’ll do it, but it’s a complete and total waste of time.”  I would have been appalled by that response had I not known that it seems to be the way most agents feel about working with banks.  They think you as a buyer simply have to give in.

Breaking news:  YOU DON’T!  Don’t let anyone tell you differently.  To make a long story short, my wife and I stood our ground, made our agent present our counter offer and, lo and behold, our counter offer was accepted…almost immediately.  The point is simple, the bank is just another seller.  Do not get intimidated, do not give in.  Make sure your agent protects your interests.  Hey, you won’t always get everything you want in a negotiation, but it never hurts to try.  If you don’t ask, you won’t get it.