Know when to walk away from an REO...but keep it on your radar!

Thanks,I'm going to look into it.You've given me some good info that I never considered.Thanks a bunch!

Good luck on this deal. As long as you find out as much information as you can you will be able to make a better more informed decision. The condo assosociation bylaws will tell you alot along with the meeting minutes with the association. A former co-worker of mine lived in a condo that had about 10 buildings in the developement. I remember he told me they all had to share in the cost of a roof for 3 buildings even though his building wasn't getting the roof. Good luck and I hope it works out for you. Believe and Achieve! - Joe

Hi There:

How do you usually work your list of properties?
Is it by a certain number a day, or when you decide
to go back to something that is on your radar, do you
have a particular kind of system?

Thanx!

Hi all,
I have located an REO in the next town over from mine.
I went on Zillow.com to get a view of the property and
I also visited later that night. It is still actively
listed at $58,000. The Zillow.com price was in the 6
figure range approaching $200,000.
FMV on it is $151,000.
My question is:How far back has Zillow been with their
Zestimates. It was sold in 2003 for $118,000.

When I walked on I saw a sign that said "AUCTION"
Nov. 26-27 and it's still listed. Looks like the
bank had it's own porch front auction and no sale.

Any experience on REO's is helpful to me. I'm new.
But I was just wondering about how backward in time
Zillow goes. Because this property is definitely been
vacant longer than 5 months.

I can see it as my 1st property offer. It's in a neighborhood
where there's all renters of blue collar working class
status.

Thanks all,

Merry Christmas and Happy Holidays

Leo

I try to determine what the average price ranges of homes are in my local market area. Then I decide what price ranges are selling the fastest and look into those homes. Say the price range tha sells the fasterin my area might be the homes between $80k to $100k. I might still look at homes in the $100k to $150k range. I will then try to make some low offers for these homes that have been on the market a long period of time. Time will usually motivate a seller. The more research you do on your local market the easier the process should become. Good luck with real estate investing. Believe and Achieve! - Joe

A website like Zillow can be helpful but don't totally rely 100% on it to make decisions on the fair market value of your area. The best thing you can do is ask a real estate agent to run comps for homes that have sold in your local area similar to this home during the past 6 to 12 months. The sales from the past 3 to 6 months should tell you the most. Also, see how fast homes are selling in your area in this price range. The average days on market (DOM) can tell you alot about an area. I hope this helps. Good luck with real estate investing. Believe and Achieve! Merry Christmas and Happy New Year. - Joe

I read through all the post here, I like reo/forclosers also. Working on deal#5,walked away from many,your so right doing your homework is key.
and sometimes owner/buyers will be willing to pay more and just move in.
when this happens ive learned to just let it go, its just part of the game.

Pastor Joe

Hello all,

I am extremely new to the DG family, I have finally talked with my coach Drew last Tuesday, and he inspired me to get things moving fast! I contacted my RE agent whom I used for purchasing my home here in Florida. He has sent me several REO's, ones in my price range $50,000. I was able to secure a "loan" from my father in law, and have been looking at some very disappointing homes that should be burned down, and rebuild a home instead of trying to fix it.
One that my Realtor showed me yesterday is a 2007 new construction home that is in fairly good condition, it was broken into...I assume after the builder walked away from it, but is something that he thinks we could get for a great price as it has been on the market through this Realtor for over 520 days. The things he mentioned to me was that I would be responsible for the "impact fees" and renewing the permits, and getting the CO final for the house. From his calculations we could easily clear a $30,000 profit by just doing some interior finish work, and get all the permits and impact fees taken care of.
My main question is...does anybody have any advice on impact fees? I have been trying to get information on the impact fees.
Any advice on this subject??
I would really like to realize a $30,000 profit on my first deal. Also need to try to figure out how to get around the FHA 90 day flip laws that they have in place.

Thanks for any help.

Bill Lainhart

Hi Everyone.

Can someone explain to me the significance of an REO HUD-owned property? The fact that it is owned by HUD, would that affect the way I make my offer? How about my exit strategy? Are there certain conditions on HUD props? I do know that HUD-owned props require that the potential buyer perform the site inspection before submitting a bid, but other than that, I do know of any other conditions.

Thank you!

Barbara

...Welcome to the DG family. The DG website is filled with information and inspiration. Make sure you get sold comps to support the after repaired value (ARV) of the REO bank owned property you are looking at.

I found some information on impact fees in Florida. This link has some good info on that subject:
http://faculty-staff.ou.edu/B/Gregory.S.Burge-1/Publications%20and%20Wor...

Good luck with real estate investing. Believe and Achieve! - Joe

.....You can find information on the official HUD website at http://portal.hud.gov/portal/page/portal/HUD

All HUD properties that are on the market and for sale are found at HUD's website at www.hudhomestore.com

Most HUD proeprties are first offered to "Owner Occupants, Government Agencies or Not for Profits". After a certain time period the properties are then open to "All Bidders" which includes investors. On the top of each status they will indicate whom can "bid" on the property. I hope this helps. Good luck with real estate investing. Believe and Achieve! - Joe

an expense charged against private developers by the county or city as a condition for granting permission to develop a specific project. The purpose of the fee is to defray the cost to thecity of expanding and extending public services to the development. Though most impact fees are collected from residential property,Example: city estimates that it would have to spend 3 million to up greade the capacity of its water system and extend water mains to serve the new subdivision, well to help cover the cost your impact fee would be $5000.00 on each new home ect. you want to find out how much this could cost ya. I hope this helps....

joe i have been reading about you for a while,i've watch you on the edge10 and i visit the website often,l've read about you and your wife stacey in dean's books' but i can't seem to figure out how to post comments until now.i need help, i try to figure out how to particapate with dg website but i'm a newbee to the internet as well. what i need is to figure out how to navagate around the website with ease. i think that i 'm my own worst enemey win it come's to the internet i'm not sure i know how to send emails, because i never had to.i get emails from dean all the time , saying -terrell are you avioding me on perpose,i don't even know how to respond to that.what i am saying is i want to be apart of this amayzing family i just need HELP on this part,being a part of this website.i have a LOT of questions about when i'm finging these amazing deals is it the amount woed on the property and then offer my best offer. i don't know what HTLM means nor do i know how to get the smiley face on here.

Great posts.
It is a good idea to set your Highest & Best and Max offer price when you place your initial offer.

Keeping up with multiple offers get harried. Keeps us in check.

-Tina

A bank owned property might not be a great bargain. Do your homework before making an offer. Make sure that the price you pay (if you’re successful) is comparable to other homes in the neighborhood. Consider the costs of renovation, including time to complete them. Don’t get caught up in a ‘bidding war’ and pay over market value. It’s an old myth that “foreclosures” are a bargain.
So how do Banks Sell REO's

Each bank/lender works a little differently, but they all have similar goals. They want to get the best price possible and have no interest in "dumping" real estate cheaply. Especially right now. Generally, banks have an entire department set up to manage their REO inventory.

Once you make an offer to purchase, banks generally present a "counter-offer." It may be at a higher price than you expect, but they have to demonstrate to investors, shareholders and auditors that they attempted to get the highest price possible. You should plan to counter the counter-offer.Very important.

Your offer or counter-offer will probably have to be reviewed and approved by several individuals and companies. Even once an offer is accepted, the bank may insert wording like “..subject to corporate approval with 5 days."

Randy Bailiff
Dean Graziosi real Estate Investment Coach

What about the condition of an REO property?

Banks always want to sell a property in "as is" condition. Most will provide a Section 1 pest certification, but not unless you include it in your offer and negotiate the point. They will allow you to get all the inspections you want (at your expense), but they may not agree to do any repairs.

Your offer should include an inspection contingency period that allows you to terminate the sale if the inspections reveal unanticipated damages that the bank will not correct.

Even though you agreed to “as is," always give the bank another opportunity to make repairs or give you a credit after you’ve completed your inspections. Sometimes they’ll re-negotiate to save the transaction instead of putting the property back on the market, but don’t take it for granted.

Banks do not want to see a lot of proprietary disclosures; they are exempt from the California Seller’s Transfer Disclosure Statement (TDS-14). If there are real estate agents involved, either representing you or the bank, those agents are required to provide you their disclosure statements.

Randy Bailiff
Dean Graziosi Real Estate Investment Coach

Here is some useful information an the basics of buying bank owned REO property. Since this is a majority of the properties that are available right now I thought this was a good time to discuss them.

While buyers have found few large discounts among bank-owned foreclosures, opportunities for bargain hunters are likely to improve if mortgage defaults continue to increase. Across the country, a staggering number of homeowners are entering the foreclosure process and many are losing their properties to the bank or lender. As the inventory of bank-owned properties grows, lenders nationwide will be more open to negotiate price and other terms. And prospective homebuyers and investors are looking to cash in on rising tide of foreclosed homes.

Caught in the turmoil of the sub-prime mortgage meltdown, a growing number of banks nationwide are scrambling to dispose of their rising inventories of foreclosed homes. Investors and homebuyers who specialize in the bank-owned properties, known as real-estate-owned, or REOs, are having a field day.
Once a home goes up for auction, a bank typically will send a representative to bid as much as the bank is owed. The lender generally will let it go if they are outbid — since they've then recouped their investment. But if the bank is the highest bidder, the property becomes an REO home.

While there are bargains to be found, REO properties aren't selling far below market value yet. One reason is that bank-owned sales transactions can be more complicated, in part because the sale terms must be approved by the lender or the lender's attorneys. Another reason it is difficult dealing with bank-owned properties is that some lenders are in offices far away from where the loss-mitigation department is struggling to process the listings. And with layoffs occurring within the industry, banks are even more understaffed than before.
Here are a few tips for foreclosure investors and homebuyers seeking bank-owned properties:
Real estate investing, like any investment strategy, is part of an overall financial plan. Before jumping into buying bank-owned real estate, understand the real estate laws, tax ramifications and other financial issues.

Don't think that foreclosure investing is easy. For every successful real estate investor, there are countless others who have failed. Make sure you spend time studying the market.

Seek professional help. Hire a real estate agent with foreclosure experience. Look for a mentor (DG) who can walk you through your first deal.

Randy Bailiff
Dean Graziosi Real Estate Investment and Life Coach

Hello everyone, My name is Chris... I'm new to real estate investing, and am currently reading Dean's book: Be a Real Estate Millionaire. I've used this site's Resource link to locate REO's in my area:DC Metro area, and located quite a few REO's. One that caught my eyes,is roughly 70K below market according to Zillow. It's in a affluent neighborhood, where homes are selling for over 1Mill. I have very little money on my own, so I'm not sure if the bank will accept a small Earnest Money Deposit less than 1K, however I'm hoping to LOCATE an investor and collect a finder's fee for my services. After a few deals, I should be able invest on my own. My questions are: What are some ways to locate investors for upper bracket properties, and is there a typical rule for what to offer a bank for it's REO properties. Thank's for your help.

You can find some buyers through the use of bandit signs, going to REI clubs and asking a realtor to run a report of sold properties where they paid cash for in the affluent local areas of where you are located. In regards of what to offer and what the bank will take, it may depend on ARV of the property and how motivated the bank might be. Good luck. Believe and Achieve! - Joe

Hi Joe I heard that many many times from the experienced long time investors over and over, "you make money when you buy the home" so thats the key to buying and making money, Jim

When you bid too much because you wanted to win it, not win it at the a certain price. The bidding price went so high . That after repair cost there was no profit for the investor's or home owner's.
house for sale in Calgary, Alberta

but I have also walked away on both and the banks are now submitting a significant drop in price, however, still not my number. I am waiting until closer to the banks deadline in hopes of a price in my neighborhood.

You are correct have to make sure that the price is right for the value of resale. There are more out there to be had.

Yes you do have to watch that profit margin.

There are always holding costs to consider as well if you are flipping, you may have realtor costs too.

If you are wholesaling, there has to be room for your assignment fee obviously.

Over bidding happens sometimes when an area gets flooded with investors (often time inexperienced investors). This drives up the prices in the area.

We have seen this happen. When it does, it's best to find a new area and move forward that way Don't pay too much.

Julie