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

Hello does anyone do wholesale deals in the state of Maryland, I have found alot of properties and just want to know the best way to get started in Maryland....

Hi, i'm a newbie and am working on a first deal. Besides the fact that i am scared to death on what i'm doing, I am pursuing this deal: 1. House is possibly and REO since in the tax records, the owner appears as a bank. 2. Found house on the net and the listing agent believes seller (which i think is a bank, although listing agent has not spoken with me yet) will accept my offer that I made by email,without seeing the house yet. I happen to know the neighborhood and the house looks like its in mint condition. The house is selling for 59,000 3br, 2ba., carport, central ac, new windows, newer roof. I offered 35,000 after calculating for repairs and taxes. 3. Physical view of the property is scheduled for tomorrow. 4. I am working on a no-money down, no credit or financing deal therefore I am obviously wanting to do an assignment contract. My question is can I do an assignment contract with an REO? Also, was looking at Dean's form "Offer to Purhase Real Estate Form". Is this something i can send to the listing agent, or should I just send the Purchase Agreement? Also, should I prepare investor forms too? Thanks for your advice.

Congratulations on pursing your first deal. Most banks usually do not like assignment deals. You can try to complete the purchase contract with your name and/or assignee as puchaser, but the bank may reject this. If this happens you may want to consdier a double close if you have a good cash buyer lined up. I hope this helps. Good luck with this potential deal. Believe and Achieve! - Joe

I'm a little skeptical about submitting anything to the listing agent in writing because I don't have a potential buyer yet. But on the other hand i cant offer a property to a buyer if its not mine yet... so i'm confused too. If i submit my offer and it gets accepted and i prepare a purchase agreement with 30-45 days... i need to find a buyer within that time frame? what if i dont find a buyer within that time frame??? then what... Besides, i can't purchase an REO unless i have the cash or the credit and i don't have either... Therefore, i need a buyer first. But i'm back to square one: how do i offer a property to a buyer if the property is not mine???

One of the keys to assigning potential deals is to try to build a buyer's list of (cash) buyers. These buyers will tell you the types of homes they deisre, in the neighborhood they desire and at what price they desire. Thus, once you know what buyers are looking for, you can try to lock up that type of deal. Also, if you find a great deal in another area, you also have a buyer's list that may have an interest even though the property may be in another area.

For ideas on buildigns a buyer's list, please see Jeff Jesnon's posting at:
http://www.deangraziosi.com/real-estate-forums/marketing-buyers-and-sell...

I hope this helps. Good luck. Believe and Achieve! - Joe

Hi, I just purchased the program and skimmed through this comments site and was trying to find out a little information about what I should expect from this program and what would be the best way to start first if I have no experience and no money. I saw a similar comment posted by someone else new but no one responded or at least I haven't seen an answer. I am very skeptical and affraid, but I guess is normal at the beginning. I need some encouragement and guidelines if anyone can provide me with. I saw some great women on the site that seems very professional and for some time in the biz and was wondering if any of you are willing to work a little with me at least until I understand what's going on. I know you are probably bored with this subject, but have no one to turn to! Please help!!!!!!!

Joe,

I haven't been online for awhilie and I wanted to thank you for the time you took to answer my questions. They were helpful, but the bad news is the property is now under contract. My hopes are still up and looking for more diamonds in the rough. Thanks.

Congratulations for being part of the DG website. The website is packed with great information and helpful members. Everyone has fear when they first start something new. As you begin to take action and learn more about real estate you will become comfortable. Remember practice makes perfect. So, try to practice areas you are not comfortable in yet and through time you will gai ncomfort and confidence.

If an area may be taking to real estate agents, then talk to several until you get a comfort level. The key is try to create an action plan that works for you. Each day if you do a little yo8 are that much closer to your goal. You may want to pick one area that you want to try and learn as much as you can about that area and be the best you can be. Good luck with real estate investing. Believe and Achieve! - Joe

That is okay, at least you were able to take action! You should give youself a pat on the back for wanting to make a change and your willingness to move forward. Some people may have fear and that holds them back. Each deal or potential deal is a good learning experience for you. The education you get is the real value and the deals will come, so keep the faith! Keep up the good work with looking for those deals. You may not always get each hot deal you find, but keep updating your action plan and keep learning along the way. Good luck with Real estate investing. Believe and Achieve! - Joe

Hello, can anyone tell me if there is a way to look up and find who the listing agent is for an REO? For some reason I am having a hard time finding out who the listing agent is for REO's in this area. No one seems to want to talk with you when trying to find out about REO's here.

Thanks
MJ

Contact any real estate agent and ask them to run you all the homes that are bank owned foreclosures (REOs) in your local area of interest. Then, cross reference the address list with the MLS listing on the internet. It will then show you who the listing agent is. Youy may see a few local agents have a majority of the REO listings. I hope this helps. Good luck with real estate investing. Believ and Achieve! - Joe

Hello and thanks Joe. I just spoke to an agent and asked them if I could have a list of REO's for my area. He laughed in my face and said he nor did anyone he knew had that information. How are we supposed to work with REO properties when you can't find out any information. I can look up a property on the county website and it will tell me it is bank owned but it will not tell me which bank or who it is listed with. I even found a property owned by a bank in the area who told me they didn't have any REO properties in this area. Why does is seem the banks want to hold onto REO's? I thought banks wanted to get rid of their properties. It appears the opposite. Any ideas?

MJ

You have a few options. You may want to contact another realtor in your desired local area of interest. Request that they provide you a summary of any properties that are listed in the multiple listing service (MLS) as "bank owned", "foreclosure" or "short sale". These properties are out there keep asking the realtors until you find one that will work with you.

Second, contact all the local small (community type)banks in your area and talk to the REO asset managers. You may have to call 10 banks before you find some, but keep calling, they are out there. Good luck with investing. Believe and Achieve! - Joe

Most banks won't allow assignments. Nathan Street said to create an llc and use it to purchase REOs. By selling the llc (limited liability company) to the end buyer. In Oregon it costs $50 to create one.

Thanks Joe, is there another direction I could be persuing instead of REO's where I could find and close a deal ASAP? I was persuing REO's because I thought I would be able to close a deal sooner than latter. What deals are considered the bread and butter of our industry? I need to close a deal within the next month or else.

Thanks
MJ

Here's an odd story on an REO that just recently happened to me. We found it listed on the internet for 139,900, the house was still under construction and the builder lost it. Then the bank lowered the price to 129,900, we immediately offered 90,000 cash with a quick closing. The bank came back for final and best, we stuck to our original offer. The bank left us hanging for about 6 weeks, then decided they were going to accept someone else's offer, but requested we keep our offer available. Time passed we eventually moved on, then yesterday while on the internet, I found the same exact house listed as an REO for 275,000. Does anybody have any clues what might be going on here? We made our first offer in August. Oh by the way we made our offer through our buyers agent who presented it to the listing agent. Myra

You may want to try to find the best properties with the greatest profit potential or profit margin and do assignments to other real estate investors. This can raise cash quickly for you. Dean has provided excellent tips on building buyers and sellers list so this should greatly assist you along the way. Good luck with real estate investing. Believe and Achieve! - Joe

I have had this happen to me as well. Some banks are hard to figure out because they may do things that may not make sense to you or I. I have even seen banks take away REO listing from an agent even when they have offers pending. I have found with REOs you may have more luck dealing with small local community banks.

If you find other REOs that are appealing but owned by a larger bank, you may want to consider having the listing agent present your offer. I believe they might be able to get a faster response and you can also build and culivate more relationships with REO real estate agents.

Then if you flip and sell the REO, you can list it with your real estate agent. Try to make it a "win-win" for everyone involved. I hope this helps. Good luck with REO real estate investing. Believe and Achieve! - Joe

Thanks for your comments. I'm glad to know I'm not crazy and this has happened to others and not just me. But, you have to wonder about the banks
motives for doing something like this, I mean this house was on the market for a couple of years and if they couldn't sell it for 139,900 or 129,900, why on earth would they raise the price to 275,000? It just doesn't make any sence to me. But I refuse to give up, I've been making offers for a while now, and so far no deals. I will not quit until I am as successful as I want to be. Myra

Believe In God, He Believes In You!

Hi Elena,

I'm a newbie in REI & new in DG community. I was just gonna ask if how much do give commission to the REO agent that would work for you, in case you close a deal?
Thanks a lot !
henca

Just keep on doing all the right things and good things will happen. I has seen some things I can't explain either. A friend told me how sometimes banks refuse offers and then sell homes for even less at auctions when they are ready to move their properties.

That is why you want to keep properties on your radar and be ready when the price is near your range. There could be new asset managers handling this property and they price the property based on non-current information. I believe you will find some deals as you keep the faith and keep the search going. Believe and Achieve! - Joe

If you are the buyer, the seller of the property pays all the commission to the real estate agents involved. If you buy a REO and fix it up and then list it to sell, then you become the seller and you pay all the commissions. I hope this helps. Good luck with real estate investing. Believe and Achieve! - Joe

Hey everybody!

Newbie here...

"what if i dont find a buyer within that time frame???"

This is a question I have as well.

#1.) I've gone back and read through many other threads and haven't found an answer yet.

What kind of liability do I have if I haven't found a buyer within 14-30, 60 or whatever time-frame was specified on the purchase agreement? Does it hurt my credit? Can I lose my house, etc.???

#2.) Which document do I put this "time-frame clause" in? Do I put it in the Purchase Agreement, or do I put in in the "Investor Disclosure Statement and Seller's Acknowledgment" agreement (found on this site)?

Thanks in advance!

Rob

If you are trying to assign a deal, it is usually best to have a buyers list already on hand. Dean has provided some great information on building a buyer's list in the latest free Successfest report. If you do not close the deal, it should not hurt your credit. That is why the terms and conditions of the agreement need to be spelled out in the purchase agreement and both parties understand and agree.

You want to include some "exit clauses" in the purchase agreement in the event you do not close the deal. The timeframe is also part of the purchase agreement. Based on the wording of the exit clause, you should not lose your earnest money deposit on a property. I hope this helps. Good luck with real estate investing. Believe and Achieve! - Joe

Thanks for the insight!

Pretty excited... I'm meeting with an agent tomorrow morning to look at an REO.

Concerning REO's:

Let's say I've identified an REO property that fits my initial criteria, but I'd like to get a more "concrete idea" of its value... My goal is to find out how much equity (the more the better) is actually in the property.

My thinking is that I can and look at comps and do my own "Fair Market Analysis'" until my eyes fall out, but none of it means anything until MY lending institution gets a bona fide appraisal of the property during the mortgage process...

So my question is: Can I order a 3rd party appraisal early on in the process before I submit an offer?

Thanks,

Rob

Each bank usually has an approved appraiser list that they can share with you. Some small banks may have a list of 3 to 4 appraisers where larger banks could have 10 to 15 to choose from. You can contact a few of the appraisers and inquire about their fees for the different types of services.

Most appraisers can offer a product less than a full blown appraisal which would be less expensive. Also real estate brokers are employed by banks to offer a BPO (Broker's Pricing Opinion) on REO properties. Thus, there can be various other sources such as these to get other opinions on pricing. I hope this helps. Good luck with REOs. Believe and Achieve! - Joe

Thanks again for the information!

I met with the Listing Agent this morning and toured the home. Home is in great shape... a few minor cosmetic repairs will be needed, and it's evident that the former owners had lots of kids (there are skuff marks on every, repeat EVERY baseboard and at the bottom of every door... as well as some colored chalk doodles... ) But the home does have a gorgeous master bath and a 6' double-wide Sub-Zero fridge and Wolf/Dacor gas range in the kitchen.

The Listing Agent told me that the Banks asking price was determined by averaging two (2) BPO's and one (1) appraisal. (performed 2 months ago)

I asked him if he could get me a list of appraisers that the bank likes to use so I could do my own using a company that the bank likes to use, and he told me that he had asked much the same before and the bank wouldn't tell him which appraiser they used, or which agent's did the BPO.

Anyhow, if the listing price is the average of two (2) BPO's and one (1) appraisal, I have a feeling their price is a pretty accurate reflection of its FMV.

Question:

Can the price one appraiser values a home at differ significantly from that of another appraisal, or are they usually pretty close i.e. +/- a few thousand dollars?
For example, lets say I hire someone to appraise a property I'm interested in and she values it at $450,000. Could another appraisal from a different company come in at $550,000? I would think that appraisers with a track record of over/under valuing properties wouldn't be able to survive in the business very long.

Thanks in Advance!

Rob

Most banks won't allow assignments. The way I learned to get around that is to create llc's for each property and sell the llc. I'm in Oregon and it cost $50.00 to create an llc. Hope that helps.

I'm not really thinking about doing an assignment or Instant Equity Exchange with this property.

I have this one targeted as a "Bird Dog" type deal. I think it's a good investment, and I know several individuals who might be interested in it enough to pay me a finders fee.

That said, I've been asking a lot of questions about "appraisals" because I want the best possible idea of it's Fair Market Value before I make my pitch to the investors.

Rob

Hey guys, I'm in the process of purchasing my first investment property. I currently own the house I am living in with the traditional 30 yr fixed rate mort. Now I am focused on purchasing an REO to fix and flip. I contacted an REO agent who told me the first thing I needed to do was get a pre qualified loan so when I found a property I would be able to grab it quickley. So my question is. With todays economy, what can I expect when I go sit down with my local community bank's mortgage office? Money down? Type of loan? Concerns I should have? Questions I should ask?