Insight on REO Offers

If you offered 82k on a 72k listed property and got rejected, I don't know what else can be done. From my experience banks are in no hurry to sell their inventory. Most times they don't even respond, let alone accept a 20%-50% off FMV. They just ignore the offer with disrespect.

I understand that banks are not in the business of managing properties, but I also know that banks are not in the business of losing money either. Banks are corporations who employ the best & brightest MBAs in order to make money, not lose it.

I don't know who these successful people are that are purchasing REOs, but it sure is not me or the other investers I know. Banks do not seem to care for our measly offerings.

I know exactly what you mean, 90% of the time I don't even get a phone call telling me that my offer was not accepted. I forgot to mention one thing, all of my offers are calculated by looking up the comparable sales in the area. My real estate agent and I pull up the comparable sales and the rent for every property to maximize cash flow. I like to see what the rent in the area is so I can make an informed decision based on a price/rent ratio. So it is not like I am pulling my offer amount out of thin air.

Real estate investing is a long term proposition. There is no magic bullet. Yes you may get lucky once in a awhile, but the true conventional way is to buy today and let equity build and general inflation increase the value of property. Buying below FMV is far and between in the real world.

Why did you offer more than the asking price?
You have to do more reseach other than your agent try zip realty and get your comp's from your title company to check the surrounding homes in that community for example I found a two REO's that was in the middle of a $400,000 complex they wanted $319,000 for the house I want, so doing some homework I found out that there was two homes that sold for $72,000 and 82,000 so I looked them up with the title company to see what bank did those REO's and to my amazement that same bank was on the house that I'm bidding on. I'm going to bid $80,000 and if they ask me why? I'm going to refer to the other house sold. There are so many way's you can come up with your bid to explain your bid use it work estimate things like plumming yard work ECT other word's justify your bid. Take picture's go over the book let it soak in.

I am not a REO guru but there is a saying that goes something like this. If you throw enough s--- on the wall, something will stick. Keep making those offers, your inventory out there is huge and sooner or later a bank will take your offer. Must be like a shark feeding frenzy out there...Jan

my first deal is a reo (Ohio) But i got it at 50% off. But it was on the market for almost a year. Maybe you need to start a relationship with the bank REO Officer ask for an email address to ask questions that can help you set up your offers in a structured way that is quick and to the point. as Matt says in the 25:1 section of the book, sometimes you send out a lot of offers and only get 1, but keep the faith and keep trying. Don't get discouraged, don't take the rejected offers personally. If it is meant to be it will be. This is my mantra at the end of the day.

I am getting lots of REO'S accpeted 50% off the price. You may need to make more offers on them. Send me a PM and I can discuss further with you.

Haha that is a great quote. That is kinda what I have been telling myself, but it still gets a little frustrating. You're exactly right, it is a feeding frenzy out here. Condos that once sold for a quarter of a million dollars at the height of the market are now being let go by banks for less than 100k. In fact, a couple weeks ago I went to go look at a place that had been on the market for 1 DAY. When I got there, the lockbox had been removed because there had been 15 offers already on the property. It's nuts.

You're getting them at half the listing price? Or 50% of their FMV?

To make any sense, it must be FMV. Otherwise, what if it's half the list price and the list price is above the FMV! The 20-50% off must always be based on the FMV, regardless what the list price is. In addition, you must also deduct the repair costs from the value you arrive at. At the end, you want to be certain that the ARV is equal to the percentage off you desire from FMV.

Hi Colby,

You might want to spend some time reading through Indiana Joe's journal. Joe does alot of REOs. If he doesn't hear back from the bank after submitting an offer, he very politely follows up with them. I can just imagine how slammed they are right now and the person you are trying to deal with may just be overwhelmed. Following up with him keeps your name and offer in front of him. Plus, you will be establishing a relationship with an Asset Manager that may pay off big time in the long run.

The other thing Joe does is, if they tell him "not interested", and he really likes the property, he keeps an eye on it. If it is still sitting on the market another 30 days, he follows up again. Be persistent. It pays off.

Build_Asset,

Hello. Can you share here with us how did you make does deal with REO's?
Im thinking of targeting REO's to get our own home with my family. I dont really have that much for a down payment but I could afford a montly of up to $2,500 comfortably. Also if you could give some advice of how should I approch it so I become a homeowner. Any advice I would greatly appreciate. I could qualify for a first time home buyer too. Let me thank you in advance for the advice. I look forward to hearing from you. Thanks.

Rendel

SoCalREI,

Hello. Which part of socal are you at? Im also from
socal. San Jose Cal to be exact.

Is San Jose in Southern Cal? I thought it was in the Bay area. Unless there is another San Jose I'm not aware of.

I'm in the LA/Orange/Ventura markets.

Haha. Yes, the Bay area. A typo error there. Thanks for answering back.

Do you have any investments all the way up here in Bay area?

Hi, I sent you a PM, would love to learn what you have done to make it work for you.