Banks are rejecting offers and backing out of HML deals in So. CAL!

Hey Tammy, that is very disappointing!On another site that I frequent alot of Calif REI's are going into virtual wholesale out of state cause they'v ran into so many problems/frustrations. Where I'm stuck currently is rural and i've ran into so much oposition with REagents.Most investors gobbling up the good deals are agents/brokers and those props sometimes are listed just one day and they are GONE!!!!! Strategy is a booger here...what a challenge.I hope you will figure out a favorable way to work around the situation in your neck of the woods. Nothing worst than impeding progress!! Regarding me, my objective is to move out of dodge asap, heading into OC and hoping to tap into the L.A. market. Way too much competion here for me, a little baby potato against people who have lived here all their lives and effortlessly claim the deals! Hey, but we know when there is a will there is a way and sometimes we just have to storm through the wall to get there. You'r courageous you'l find a way. Take care
Cb

"This is EXACTLY how I lost my last deal where I the offer was already accepted getting $45K back at closing."

Can you sue them for specific performance or did they have their own weasel clause?

Yes, agents are TOUGH to come by. I went through 8, I am on my 9th and she seems to be working out very well, but it took interviewing MANY agents and finding one willing to do the work! As far as moving from OC to LA, the same obstacles are in LA as well, competition is fierce and the best opportunities are found with off market properties. A good agent has access to off market properties and will tell you about them. The good news is is that the majority of RE agents are not investors ironically. The bad news, this makes it extremely difficult to find an agent that will do what an investor needs them to do.

Yes Tom, they had a clause that if I couldn't get my HML to put in writing that the $45K out at escrow closing is ok, then they are off the hook. Of course, they wouldn't physically write that; they gave a LOI to fund the deal with me having to come up with an additional $50K on top of the $45K (this is how HMLers work here; there isn't a 'no money needed' HMLer here in CA unless you find your own true private money lender. Its a whole 'nother ball game here! I even had partners come in with their POF and was going to partner, these were ACTUAL bank account statements, but they did not accept that either. *sigh*

An associate of mine lives and works in the LA/Beverly Hills area and he told me that there are so many European and Asian investors coming in with cash, closing in days that nowadays banks aren't even entertaining transactional and HML's

He said since January, he's been cleaning up and all his clients are all foreign.

"there isn't a 'no money needed' HMLer here in CA unless you find your own true private money lender."

Yup. All the ones i have come across want you to have some skin in the game.

Elix....lot of Canadian investors too.

I am finding my real deals working directly with unlisted homeowners in distress or just motivated ones for what ever reason. NO realtors or lenders involved!! Have not had a single lender say one word about where my money is coming from, as far as they know it's coming out of my back pocket. I use my own purchase and sale agreement and several different investor friendly title companies. I don't do anything "creative" as far as the lender is concerned. I have a signed and accepted contract from the homeowner. I am paying cash at closing, the title company calls the lender for the payoff amount and we close. The lender does not know where my money comes from if I am using TF and double closing, assigning the contract, simultaneous closing, (they hate that one, but never know!) or using private or hard money.

Finding motivated home owners requires lots of marketing to unlisted sellers, door knocking, phone calls, mailers(least effective) and BANDIT SIGNS.

I still make offers on REOs, I try to do 2 a day. Picking one up is few and far between these days and takes time to get them at the right price. Some foreign investor or over anxious new bee usually comes along and pays more than I will offer. Right now REOs are listed at crazy prices. The guy that does the BPO is driving by at 100 MPH if you ask me! Anyway, just picked one up that I used my guys TF letter for my POF and did a simultaneous closing using my buyers funds to cover the a to b! It was a Wells Fargo property.
So I used TF POF letter and closed with my buyers money on a REO!

I really stay away from RE "establishment" type deals and networking. I don't rely on realtors to provide my deals for the time being. I use them of course but do not RELY on them.( I ALWAYS use my realtors to list my properties) Conventional purchases are out of the question for me. Way to much time and effort and then nothing happens. I would rather talk with homeowners than with banks and realtors for now anyway. That could change in the future if the banks pull their heads out so to speak. Why should they with foreigners buying up America. Can't compete with their $$$$! The banks just want the money, they don't care its coming from China!

Michael Mangham
MD Home Acquisitions LLC

This is how most on here, especially the 'non-experienced' should do it.

Hey Michael,
Here in CA that is far and few between. The majority of sellers are flip flopped in their values and/or expect more than what their home is worth. And of course, you can show them all the comps, explain about foreclosures, agent fees, termite fees, paying buyers closing costs; but usually it ends up as 'well, if you change your mind, give me a call' and then wait a few months and then call them back; its a long process. I can drive for an hour and not see a FSBO sign, but there are foreclosures everywhere.

Where I am at, a bandit sign doesn't stay up for more than an hour, and even on weekends, they are removed quickly. The only way I've gotten a bandit sign to stay is to get a heavy chain and padlock it to a tree with an expensive metal sign and sign holder. I've even tried using large pieces of heavy wood, making large fold out signs that require 2 or more people to lift them, using a template I cut out on pieces of cardboard, spray painting the template for the sign and putting them out. These are signs that are taller and heavier than I am, and they get taken like THAT! So, it isn't for lack of trying! LOL

I get a few leads from CL and web marketing, a couple from vehicle signs, but the majority of things out here are short sales or foreclosures, and all cash buyers are gobbling them up. No room for the little guy! Door knocking doesn't work too well when you have 4 kids in tow, so I am getting some interns and this is one thing I'm trying to set up for pre foreclosures that have equity. But, CA is another world from CO, I wish I could move states! We definitely have our work cut out for us in CA!

Closing with REOS using the buyer's money in this state is not legal (yes, this is one that really is illegal) so a transactional funder is required; unless you use a land trust and transfer beneficial interest and/or the trustee resigns, or buy in an LLC and sell the LLC interest to someone else. And, as sad as it is, the banks do seem to care where the money is coming from, because they are shunning the HML buyers. , at least here in So. CA.

And, I am on my 9th RE agent, and have been flying solo before this, but this agent is a worker and is AWESOME! When you find a good agent, your workload is slashed tremendously, something I really need being a SAH mom to 4 and homeschooling, and gets leads before they come on the market; especially foreclosure leads. CA is just WHACKED!

I'm still waiting to do a deal together with you Michael! We can do one out here or in your neck of the woods, but I am SO ready to get another rehab property!

I'm in So.Cal and wanted to mention the reason some of these banks aren't selling REOs individually is because the are selling the mortgages themselves. This saves them time and money because they don't have to foreclose on the property so they can sell the mortgage note at a higher discount and they usually sell them in bulk.

I currently have a tape with 17 properties in Cali for sale. These are multi family units and the NOD has already been sent out by the bank which means when you purchase these properties you have instant cash flow and can take possesion of the property. It's basically purchasing the trust deed.

Hope this gave a little insight, send me a message if you would like to see an example of the properties I have.