REO purchase questions.

Tony - I've offered on a number of REO's and purchased a few. In response to your questions:

1. You will have to use their contract. 99% of the time it will not be assignable.

2. You may be able to use a POF to submit with the offer, but once accepted, you generally will have 48 hours to submit a cashier's check for EM. $1,000 is the going rate although you may be able to negotiate less.

3. You'll use the inspection contingency of 7-10 days to find a buyer.

4. After your inspection contingency expires and you have no others, you would lose your deposit (EM) if you can't close. You may be able to add in a financing contingency for up to 30 days. Depends on the bank.

5. I've only bought and sold properties...never have double closed so can't comment on that one.

Hope that helps and good luck!

- Tom

Thanks Tom for the info.

Perhaps I can weigh in on the question of contracts for double closing. As Tom mentioned above, foreclosed properties are almost always listed with Real Estate Brokerages, so you will be working with an agent, and agents are required to use the state approved Real Estate Purchase Contract in every transaction. So the front end of the transaction, with the seller, will use the Board of Realtors approved purchase contract for your state.
The back end of the transaction will also require a Real Estate Purchase Contract, but you do not need to use a real estate agent when you contact your cash buyers and negotiate the purchase with them. In fact, it would be very expensive to use an agent if you already have relationships with these cash buyers and all you need to do is see if they are interested, and fill out the agreement form.
You are at liberty to use any real estate purchase contract for this back end transaction that satisfies the minimum requirements of a purchase contract--there is a purchase contract form included on this website. It is the recommendation of this program that, if possible, you use the state approved purchase contract for your state even on your private transactions. This recommendation is made for the two following reasons: A) It has been reviewed by multiple licensed attorneys in the state for legality and completeness; B) It will come with any state-required disclosures attached or accompanying the basic form. The state form was tailored to be used in your state, if you can obtain one and use it, or better, adapt it to your purposes, you will have a very complete form to use for your transactions.
If you choose to use another form than the state approved form, it is the recommendation of the program that you have that form reviewed by a local attorney for compliance with all state/local requirements.
Best wishes with all your transactions.

Thanks Dallin for adding this info and helping me understand what contracts I should use.

My realtor is asking $1000 deposit to submit offer and isn't accepting a POF letter, is their any way around this without having to come up with $1000 check?

Tony

Most people in our program are offering $500 as their standard Earnest Money Deposit (EMD), payable within 72 hours after acceptance of offer (not when the offer is presented). It is difficult to get around the EMD even though it is not a legal requirement of an offer. The 72 hours after acceptance should be one of your additions to the purchase contract, and if you can act quickly to line up your cash buyer and collect some money from them up front, it may be possible for you to use the cash buyer's money for the EMD. Remember that agents and sellers judge the relative strength of your offer not only by the price and terms, but also by the presence of an EMD.
As far as the Proof of Funds not being acceptable, if they are resistant to the POF on the basis of it mentioning a loan, try some other sources of POF letters to see what their verbiage is, such as besttransactionfunding.com, transactionalfunding.com, or investorfundingsite.com. If these methods fail, it is possible to obtain a Verification of Deposit, which is an actual bank deposit record from a live account for an individual. But there is a cost associated with that. The source that we are using in our office is linksourcemanagement.com/innercircle. It may be necessary in some areas to have stronger documentation and EMD's than other areas. It may also be that you have a real estate agent whose expectations are inconsistent with investor needs and you would need to find another agent.

Tony,

tell you agent that you will give them a copy of a check, and when your offer gets accepted, you will provide the original check. Tell your agent that you make several offers, because you have several partners, and it would be a stretch to give her actual funds for every offer that may not get accepted.

Have your buyer(s) ready, and as soon as your offer gets accepted, you have your buyer provide the funds for the EM...

Wishing you success,

Dallin, very good point on the $500 EMD. Thanks for the funding sources.

Valarie, love your idea. Thanks