Presenting Offers on REOs - Property Listing Agent vs. Buyer's Agent

Hi Joe,

I've been rehabbing REO's and HUD's since 2004 in Michigan. I am currently trying to transition to wholesaling, however, making offers on REO's is something I've done many times before. I have been a loan officer for a mortgage company, my father still is, and between us we know a 100 or so RE agents. With this in mind, I've ALWAYS made MY OFFERS on REO's with the LISTING REO AGENTS! I cut out the "middle-man" so to speak bc I feel that I can make a more compelling offer to the agent than a buyer's agent can. Remember, we are in the "people" biz and you should get to know these agents. How many offers per day do you think they get on that same property??? It's more than just yours and it's not just a numbers game - it's a people game. I have never put down a contingency on my initial offers which helps it look better to the agent. They think you're for real, you are ready to close fast, and you're not wasting their time. In my experience, the bank always sends back an addendum to the PA after they have accepted your offer. This addendum allows for a inspection period of usually 10 days even though on the original you didn't ask for one. This will allow you to CYA if you've made a mistake on your offer. Also, some reo agents send their packages to the banks via fax, some email, and some use verbal offers with the banks mitigators until they find one they like. Knowing this, when I make my offer, I always ask how they submit their offers and offer to help. Be a little pushy, ask if you can wait for the fax submittal page, wait while they email it over, or ask if you can be notified of the phone call outcome. Get personable - you're in the people biz!!! Hope this helps...Good Luck!

Thank you for taking the time to share your insight and procedures when working with listing agents on REOs. I really found the information useful and I really like your approach. I realize sometimes it takes a while to perfect a system or approach and it is very gracious for you to provide the steps and details. Thanks again and good luck with all your deals. Believe and Achieve! Indiana-Joe

Wok4no1, great insight...

Joe, I think Work4no1 is on to something there. Also, we could debate the legality and ethics of a listing agent holding offers all day long, but in the end I think it is safe to say it is possible. Has your agent followed up with them? Otherwise it gives them plausible deniability if it turns out they didn't ("Oh, it must have got lost on the fax machine").

With a lot people hurting right now there are all sorts of nasty stuff going on in all forms of business. Not to imply that is the case with your situation, but I am saying it is not beyond the realm of possibility. I would try a second round of offers submitted just to the listing agents. I would assume when they have the full commission on their side they will be more apt to persuade the bank to take your offer.

That, or basically work the channels to see if they are complying by presenting the offer. However, if you stir up some trouble you might find yourself as a enemy instead of an asset.

As work Work4no1 said, it is a people game also, so I would try to moves to position yourself on the side of the people who can make the deals happen for as opposed to being a vigilantie, lol.

Let's all keep up the good info!...it's up to us investors to bailout the banks before our great, great, great, great grandchildren are left paying taxes to the gov't for our generation's problem!!! lol.

Thanks so much for the great infos you are sharing.
I have a question though what does PA and CYA mean? I'm a newbie and would greatly appreciated.

Good Luck on all your deals.

There are a lot of abbreviations and you can also check a thread for others. In regards to the email above, PA means Purchase Agreement (the contract when you put in an offer) and CYA means "Cover Your Behind" for lack of a better explanation. Good luck on all your deals. Believe and Achieve! Indiana-Joe

Offers on REOs are rampant and a good many investors are buying homes at extreme discounts to market value. These are varying from buying at 70% to 50% and some lower than that.

Thanks for the comments and insight. It is a great time to buy REOs. I hope many DG students are making those low offers and soon will be able to close or assign some great deals. Believe and Achieve! - Joe

Hello everyone, I would like opinions on which approach a new invester should use to assign real estate, REO'S, short sale's, or Buy Owner

Hi Bonilraf,
It would depend on your personal needs. If you are in need of immediate income then FSBO or assignments are going to be the direction of focus. If your not in a hurry then REO's would be the direction to head. Foreclosures are a longer process. But I wouldn't miss out on any deals if the opportunity arises. Take advantage of an offer when possible. You never know what doors it might open! Continued success to you..............Lubertha

Iv'e had may eyes on a couple of properties that are bank owned but aren't for sale yet. What's the best way to approach them? Should I just call the number on the sign outside the house (remax, coldwell-banker, etc.) or should I try to find out who the actual owner is and contact them directly?

Welcoem to the DG website community. The most important aspect may include what types of deals might appeal to buyer's in your local area. Try to build a buyer's list and understand what buyer's want in your area. The buyer's list is always a list that you will be updating and adding to. Buyers tastes may change and the appetite for deals may change in local areas or what they want to pay, so always stay current with your buyers aspirations of what they want and what they want to pay. Find the types of deals that will appeal to your buyers. Make sure there is enough of a profit margin to get you paid plus appeal to your buyer. The larger potential profit the better. Your buyers may get a great deal and always want more deals if you find them a great deal! Lock up the potential deals and make sure you have some exit contingences in your contract to purchase if the deal or assignment does not work out. Good luck with REII Believe and Achieve! - Joe

Thanks for sharing your comments and insight with us. Continued success on all your deals. Believe and Achieve! - Joe

The more information you can find out about an REO the better you position may be. I have found the larger banks want you to go through the realtor. However, if it is a small local bank, find out the Asset Manager in charge of the REOs and just ask the question. I have found both when approaching REO Asset Managers. Some have stated call to call them directly while others stated please go through the realtor. Good luck with these REOs. Believe and Achieve! - Joe

Thanks for the insight and the information about doing the search. The more information we can find about a property the better bargaining position we may be in with the bank. Good luck on all your deals. Believe and Achieve! - Joe

Hi Kevin, Question for you. I too am from Michigan just moved here form Iowa about 1 year ago.I am jut getting started in the program.My question is I am looking at aREO on property that is "valued" at 195,000. THE house is listed for 64,900. Went and looked at it today. Do you have any names of finance or mortgage brokers that will act quickly? There is one offer on the table now and 'm sure more to follow rapidly. Thanks Jesmi

Hello I new to the realestate investing... I just got thru reading the book... I still dont know where to start,,,, I 'm a single mother with two kids, no job..But I do have hope and I'm a go-getter....is their anybody that can give me some info... I'm loc in cali... I have good credit..but that's it.....

newbie need some info on how to start....

Newbe to investing,how much do you need to put down on and REO when submitting a Bid,and I heard that Land Trust can be used to ( is this correct ).

Thanks
William

Lkke I said before I'm building my buyers list. One bright spot on my list is a cash buyer who is looking for 40% to 60% equity on the after repair value. The property I'm considering is an REO fixer-upper. According to the listing agent, it needs about $30k to $40k in repairs.

How can I get a good estimate of the needed repairs without having to pay upfront for a home inspection?

I was thinking about finding a general contractor or something like that to come with me to do a walk through and tell me what needs to be repaired and how much it would be to do the repair. The thing is, I'd need them to do that for free. Does that sound like a decent plan? Need to see the place in the next few days.

Thanks for your help.

when you make an offer to a bank on an REO or work with a bank on a short sale and they accept your offer, do they allow you to assign the contract to someone else? If my strategy is the no money down offer, is it only possible to do this with Pre-foreclosures or FSBO's?

I'd like to make an offer on a house that I think has been foreclosed. I've developed a method for finding them early but have one problem; the previous owner is gone and I don't know who holds the mortgage. Public records are soooo slow. Any way to find out? Any suggestions are appreciated.

Would that be 70% off of the current FMV, or is it 70% off ARV?

Are you trying to purchase the property to live in or flip? This makes a big difference in the type of financing you're going to need.

This Reo is to live in.

This Reo is to live in.

on the agreed upon minimum of what the Lender specifies for EMD and any other additional deposits (if) they require you to to put down (depending upon the property) to even take your offer seriously. Like the offer I put in today; I gave a copy of EMD check for $1k to my REA that I'm working with. The property is only listed for $12k. I offered $6k. If you go to closing that EMD is credit towards your closing costs. They will specific the amt (certified funds) you have to bring to closing table if you're the end buyer.

whether they will allow you to assign the contract if they own (REO) it or its a short sale. You have to get the lender to agree to assignment of contract. You got to understand they are protecting the asset (collateral). A FSBO you should have no problem as long as you can get them to agree to AOC and what you're doing to help them sell their house.

Find a contractor to be on your team, to go around with you, to give estimates of what it will take to repair, replace or add systems and/or features to homes that you get an offer accepted on or that interest you. You can also team up with an Appraiser they will know what the building costs are to build a house, with similar features as your subject house, at today's prices. Some contractors will give you a free estimate. Just make sure the one you choose to work with is Insured and Bonded (both for Appraiser and Contractor).

I found a contractor who actually works with another investor doing that very thing. He's going to do a walk through with me next week and give me a free estimate.