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Author Topic: Bank Owned/REO's  (Read 14095 times)

Offline eastsideguy1124

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Bank Owned/REO's
« on: September 25, 2006, 11:09:05 pm »
As anyone had any luck with bank owned or REO properties? I have no problem finding these properties, but getting the bank to except anything other then a full price offer is another story! Are there any tips or ďtricksĒ when it comes to dealing with these types of properties?

Offline NoMoneyDown

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Re:Bank Owned/REO's
« Reply #1 on: September 26, 2006, 07:08:43 am »
People have and do make money with REO's.  I believe "reoconsultants" has made a lot of money with them.  My experience, though, is much like yours - I submit a low offer and the bank counters by dropping their price by only a few $100's (if any).  I heard a good way to get them at a lower price is to purchase in bulk, but, again, I don't have any experience in it (just what I've heard).
Stephen
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Offline gordo2417

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Re:Bank Owned/REO's
« Reply #2 on: September 26, 2006, 12:50:52 pm »
I've had some luck with them.  You have to catch them right and you can make good money on them.  Not killer deals but good deals.  Just keep lowballing and sooner or later someone will play ball.  Usually they have to sit on the market for awhile before they lower it to where it needs to be.  Around here you can expect the price to go down about 5K a month.  

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Offline aak5454

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Re:Bank Owned/REO's
« Reply #3 on: September 26, 2006, 02:42:41 pm »
I've bought one (in '03) and offered on a few others.  You can get good deal, but not great deals.  If you are looking to do super low-baller type offers, you are probably better off to deal with other types of Sellers.

Offline eirek

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Re:Bank Owned/REO's
« Reply #4 on: September 27, 2006, 08:56:46 am »
Wow, you guys have had much different experiences then me.

All of my properties I buy are REO's and I usually get them for between $15k and $5k under the asking price(They're usually under priced anyways)  For instance, my last house appraised at  $100k, they were asking $70.  So we came in made an offer of like $45k we haggled back and forth and got our last offer of $57k accepted.

I've had 5 REO's where on each one I've made, or could've made after hard money fees over $50,000 on each one.  But I've only had 1 FSBO/Short Sale that I've made decent money off of.

My experiences are that banks just want to get rid of them.  Come in with a lowball offer to make them think there house isn't worth what they're asking.  When you counter back on their high offer, make notice of the major problems in the house and go a little higher.  Do this a few times and if need be, let them sit for a little while.  You DONT want to look like you have a good deal on your hands otherwise they will hold onto it.
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Offline eastsideguy1124

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Re:Bank Owned/REO's
« Reply #5 on: September 27, 2006, 09:56:51 am »
Eirek what state are you located in? Iím in MN. Its not that there arenít good REO deals out to be had but I was curious as to the best way at getting them. The route you described makes a lot of sense. Iím starting to wonder if banks or their agents ever look at these properties or do they base their evaluation off the county tax values? I have been in several homes that had been priced very close to their appraised value and were not worth half that. How many days on the market typically are the homes you make offers on? I imagine that the longer they have sat idle and unsold, the more likely to move the property the bank is. Here in MN we have a 6month redemption period. Is that standard around the country?

Offline aak5454

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Re:Bank Owned/REO's
« Reply #6 on: September 27, 2006, 10:16:56 am »
I think it can depend a lot on where inthe country it is (mine was in Calif and in early '03 the market was going pretty nicely).

As for redemption periods, its a state by state thing.  Some states have it, some don't; depends on their foreclosure laws.  A good list of states procedures can be found at www.foreclosureforum.com (check left side tool bar).

Offline eirek

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Re:Bank Owned/REO's
« Reply #7 on: September 27, 2006, 10:18:50 am »
I work out of the east texas area.

Typically from what I've seen, banks never look at the property themselves.  They hire a Real Estate Agent and that agent essentially does a quick value for the bank with some comps to let them know whats it worth.

After they get the value from the Real Estate Agent, they then will either put it on the market based on 5% under that value, or if they think the Real Estate Agent is way off, they will get a real appraisal(rare).

Well I could tell stories on my houses but I'm sure you don't want to listen to all of it :)  Needless to say, banks...especially big banks don't like to hold onto properties.  Let them know the condition it is in, how much money(always include your labor costs...$20k for a roof, not $8k since your doing it yourself) After they see that the average person would have to put in over $30k on a house they will accept your offer after a little thinking.

If you want any tips or some of my experiences feel free to give me a call.
« Last Edit: September 27, 2006, 10:21:07 am by eirek »
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Offline gordo2417

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Re:Bank Owned/REO's
« Reply #8 on: September 27, 2006, 02:28:06 pm »
I've never seen a bank care much about how much a home needs for repairs.  They are only concerned about the money at the end of the day.  Out of curiousity...........do you include a repair sheet with your offers?  Do your realtors care?  Listing agents?

Nate-WI
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Offline eirek

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Re:Bank Owned/REO's
« Reply #9 on: September 27, 2006, 03:23:07 pm »
You are correct, they don't care about it needing repairs.  What they do care about though is if the property is in such bad condition that no one wants to buy it.  If you let them know in the comment section that you are deducting the price because of fixes they will notice.
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Offline propertymanager

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Re:Bank Owned/REO's
« Reply #10 on: September 28, 2006, 07:04:34 am »
I have also bought a bunch of REOs.  You can get some great deals if you work at it.  I bought a duplex for $11,000 that appraised at $80K.  I bought a SFH for $17K that appraised for $52K and needed only cosmetic repairs.  It took almost a year of submitting offers before the bank finally accepted the duplex offer.  So, one "tip" is to be persistent.  Another tip is to pay cash.  With all the newbies and wannabe homeowners out there, a large percentage of people making offers can't close.  If you make a cash offer and provide proof of funds, that speaks volumes to the bank.  Also, don't include any contingencies in your offer.  The banks usually won't accept any contingencies anyway and putting them in your offer tells the bank that you are not experienced in dealing with REOs.  

Good Luck,

Mike
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Offline eastsideguy1124

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Re:Bank Owned/REO's
« Reply #11 on: September 28, 2006, 09:20:10 am »
Mike what area are you in? I agree 100% that cash is king, but the housing market in the twin cities of MN has exploded last few years. Itís almost impossible to find any SFH below $75,000. The ones you do find that low are more then just cosmetic. They are boarding on the edge of just tearing the property down and starting over. Is it ever ok or ethical to call the listing agent of these properties if I am not a agent?

Offline eirek

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Re:Bank Owned/REO's
« Reply #12 on: September 28, 2006, 09:27:47 am »
Of course you can call an agent.  That is why they have signs out, they want you to call them.
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Offline gusrock1414

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Re:Bank Owned/REO's
« Reply #13 on: October 03, 2006, 07:17:26 pm »
What people need to understand is that bank owned property is generally not a good investment in the times we are in now. Of course it depends on the area, but banks are not having to foreclose as much as you would think. The overall economy is too good for banks just to give properties away. Once things turn for the worse and banks and loan portfolios go bad, then there will be properties to be had. Banks are in the business of real estate bc that is their collateral to repay a loan. And banks are forming subsidiaries that will buy the property, fix up, and resell instead of selling to any investor.

Offline gordo2417

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Re:Bank Owned/REO's
« Reply #14 on: October 03, 2006, 09:04:49 pm »
I disagree.  I think it depends alot on your market.  Banks that are taking back here in NE WI might look at holding them a little differently than in say California or Texas.  There are good deals to be made.  You have to catch them at a good time, watch the properties come down, and even then keep lowballing.  About the economy.......again depends on your market.  A small city about 15 minutes from me is losing 300 jobs (paper mill) and another business is losing about 100 people.  Not a good economy for that city and foreclosures will no doubt be coming forth.   For example....I'm bidding on a home that has an ARV of 110-113K that is an REO.  The bank (HSBC) just dropped their price from 94.9K to 79.9K.  Getting closer to a deal with this one.  Around 70K and it would be a decent deal with 15K in repairs needed.  I've been keeping an eye on this one and so has my realtor who stays on top of these REO's and gets me the info asap.  There are deals to be had so don't give up, keep good notes, track them, and when they get close to your price, jump on them!

Nate-WI  
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njainvestments.com
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[email protected]

 




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