Getting a bank to Finance an REO!

A man after my own heart!

I love your approach on this and I am so glad to see you just step out there. You see...when he did not hang up thats almost better than a yes and I guarantee you, you hav just developed a long term relationship.

Congrats.

Hi.I was reading in Dean's books about REOs.I'm wondering if someone in my position can still buy properties from a bank? I lost my job at the first of the year,my credit is awful and no money left.

Hello Anita,

Thanks for the kind words and positive feedback. I thought I would ask the Bank President for more than what I wanted to make the deal. I was readt for some push back by the Bank President. To my surprise, he seemed very open to the idea. I believe to make a phone call and email may be more effective than being in person, because it can give people time to think without reading you about your offer. I thought....wow....I may be on to something. I will keep my fingers crossed and I appreciate the DG members support. I will keep everyone posted. Thanks and have a great day. Believe and Achieve

Hello,

Thanks for the inquiry. I believe Dean's books can give you the confidence and knowledge to achieve your real estate dreams. You are on the right track because you have taken the first step with Dean's book and you are on the website. This website is filled with knowledge and great people. Be confident when you call a bank about their REOs. It is a people business so if you are polite and friendly with a confidence in you voice, people will be friendly in return. Always speak as if you have a warm smile and this comes through the phone. The key with REOs is to figure out how long the bank has had them and how motivated they are to sell them. Always try to find out whom the decision makers are. Therefore, be sure to call local banks, find those REOs, learn along the way and great things should happen. My experience has motivated me to call as many banks as I can and hopefully find a few more deals! Believe and Achieve

Great job on being persistent! It obviously payed off! I was wondering, did you just crack open the phone book and start calling down the line? I was also curious about the 100% financing... Did you have to qualify like a conventional loan? Proof of income,w2, proof of funds? Anything else you can share? Thanks!

Thanks for the email. I drove around my local area and wrote down a few of the small local banks. I started calling to inquire about any REOs the bank may have had. The first 2 banks told me they did not have any but the second bank told me to try this bank. Thus, I guess I got lucky. I contacted the bank and spoke to the employee taking care of the home. He told me the bank had it about 2 years and he could show me the home. When I met him at the home, I learned the bank had keep on all the utlities and had other costs such as insurance. property taxes, etc. for the home. The employee stated that he would be happy once the bank sold the home. Thus, I was put in contact with the right person. Right now I am waiting to see if the Board approves the sale. The Bank President stated that he wanted to take it to the board for approval. He did not ask for any proof of income or application at this point. I will keep everyone updated as this deal moves forward. I believe the bank is motivated and is eager to move the home. Have a great day. Believe and Achieve!

Sounds like you may have a great deal in the works Indiana Joe.I am looking into an Reo deal myself, and my question is this.I see you are looking for 100% financing and also some rehab capital from the bank, but i noticed that you did'nt mention anything about a down payment or even earnest money.When you say 100% financing does that include the down payment /e.m. deposit or lack thereof.I am just trying to get some insight as to how desperate and willing to deal w/you that the bank in question is,and also learn some possibilities and options for the deal i am working on, as i have only done a walkthrough w/the realtor and have yet to make an offer on my deal.Also if you do plan on a down payment or e.m. deposit what % of the asking price do you anticipate offering. Clovis M.

Hi Indiana-Joe,

Thanks for posting this. I had one question. Do you contact the local bank branches directly to find out their REO inventory, and do they have the authority to accept offers? Or are you dealing with a corporate level bank office on this?

Craig

Hello Clovis,

Thanks for the reply. I am dealing directly with the bank on this REO. Most banks use a realtor to help sell their REOs, but I got lucky because this bank did not have a realtor and I found the person at the bank that was in charge of taking care of the REO. He showed me the property and stated that I would need to deal with the bank president regarding my offer. I did not offer a down payment or earnest money at this point in time. I believe if the board of the bank okays it, I will request for title insurance and the bank will proceed with the closing without any down payment or earnest money. Since this will be 100% no money down with the bank that owns it offering the financing, I would hope it will go smooth. The bank may come back and ask for a higher price to include title insurance, etc. or not provide the entire $10k for the cosmetic work. This is ok because I wanted to ask for more than I really wanted to make the bank feel I would give a little on the negotiation side. I am flexible with the final price that I pay for this home, as long as they offer a good interest rate. I just want to ensure positive cash flow as we move forward with final terms, etc. I will keep you posted as we proceed. Believe and Achieve

Hello Craig,

Thanks for the inquiry. The current no money down REO deal that I am working is with the main branch of a local bank. They only have 3 branches total. Thus, the Bank President at the main branch appears to be the decision maker before he presents it to the Board. When contacting the local banks always try to find out 2 things. You is in charge of managing the Bank's REOs and who makes the decision on selling the REOs. It make take a lot of calls, but persistance should pay off. Good luck with your deals. Believe and Achieve!

Hello! i'm looking for a few opinionson how do i go about getting a proof of funds
letter? first maybe i need to explain a little.i purchase a property in august of 2008. i then since purchase Dean's books . got excited ! recently i to get pre-qualifed again.found out that qualifiy this time around is going to be a little diffcult . due to debt to loan & income ratio is there any way around this?
my credit rating is good & i have some cash but would like to use opm . any suggestions

Try to get pre-approved by a local bank in your area or go to a mortage broker and see if they can help you out. Usually if a deal is a very good deal you may be able to get a hard money lender or a partner to put up the funds. If you take on a partner, they should also be able to get you a proof of funds letter. Almost all REOs will request a pof letter. Good luck on all your deals. Believe and Achieve!

THANKS! Joe i'll try a local bank , i have try several mortgage brokers . again thank you

nvm

I have not heard back form the bank as of today. I emailed the Bank President and will let you know what the status of this deal may be. Good luck on all your deals. Believe and Achieve! Indiana-Joe

This evening I had a message from the Bank President and he stated that he apologized for not getting back to me sooner (it has been almost 4-5 weeks). He requested that I call tomorrow to further discuss this property. Hopefully patience has paid off. I will let everyone know how this plays out. Good luck on all your deals! Believe and Achieve! - Joe

So it's true when they say, patience is a virtue? Bank President? Ahhhhh Joe......I see a long term relationship about to happen. Do You? Go Joe! Keep us posted. Continued success.......Lubertha

Good morning and thanks for the insight. It sures finally feels good to have the Bankers calling me rather than me feel like I am running a marathon to get to them. When I first went to the bank, I felt like George Bailey from the movie "It's a Wonderful Life" where George meets Mr. Potter at the bank and then George sinks about 2 feet into Mr. Potter's chair!

Anyway, I hope this works out and is a win-win for the bank and I. Because I do want to cultivate that long term relationship and if you have the ear of the decision makers you can usually get things done. Good luck on all your deals! Believe and Achieve! - Joe

I contacted the bank yesterday and had an opportunity to talk with the Bank President. They offered to sell me the REO and do 100% financing at 6.5% but did not want to provide the $10k for the rest of the updating of cosmetic work to the home. I believe I will need to run the numbers and look at my options. I will keep everyone updated. Believe and Achieve! - Joe

Joe,

Run your numbers again. You have overcome the first hurdle of 100% financing now you have to make the repairs fit, if that makes sense. If not, let me know your scenario.

Thanks for the comments and the input. I emailed the Bank President this weekend and I indicated that I wanted a lower purchase price with the 6 1/4% interest rate or I could offer a higher purchase price with the interest rate tied to the prime rate for the first 5 years amortized over 30 year and adjusting every 5 years. I believe within 5 years the market should improve and I would either refi with my equity or sell the home at that point in time. The market right now in my area is pretty good and I just found 5-10 other properties that I will have on my radar. Thanks again and good luck with your deals. Believe and Achieve! - Joe

Great strategy Joe. It never hurts to ask for what yo want. Continued success.......Lubertha

Thanks for the email and the support. As of today, 06-09-09, I am still waiting on a reply from the bank on this REO. I will update everyone as soon as I hear back. Thanks for the support. Continued success. Believe and Achieve! - Joe

I have REO's listing in Michigan area!

Thanks for the post. Are you currently working on a deal or looking into REOs or do you have a list of REO information to share with us. What part of Michigan are the REOs located? Believe and Achieve! - Joe

Will a bank that is offering 100% financing, will they allow you to reassign the home? Hope this doesn't sound silly. Thanks
Lubertha

I am not sure if they would allow me to assign the home, but my strategy would be a "buy and hold". As long as I can break-even or better yet have a positive cash flow with 100% bank financing, I would hope within the next 5 years or so, I could sell the home on an up swing market. If not, it may make a good longer term asset to have as a rental property. Either way, I would be very happy if this deals works out based on the numbers. I believe it can be win-win for me and the bank. Thanks again for your input. Believe and Achieve! - Joe

Thanks for the reply. It makes sense to start gearing towards long term investments. Building a residual income. Thanks again............Much success!
Lubertha

Thanks for the comments. I spoke to the Bank President today and we are negotiating terms and price. It looks like a deal may be close on this one. Wish me luck, and I will keep everyone posted. Thanks again and continued success. Believe and Achieve! -Joe

It's just waiting for your signature!