2 foreclosure properties just fell in my lap

[moonstruckprincessa]

Ok. I had an offer in with an agent. I just called her to find out the status of the deal and the offer was not accepted (the bank has it's head up it's @$$). Anyway, we got to talking and she has 2 foreclosure listings. She is very straight forward and told me about the banks that are holding these 2 properties. The first one is very lax and I will offer $550K  (it appraised at $700K and is offered at $699K). The second over the phone I offered $675K because another $650K offer was rejected by that bank. My issues now is should I assign them or do a double close?

That brings me to yet another issue of finding someone to buy them. Out here someone who will buy them quickly want to pay 50,70,90% of market value, not appraisal value. They are both turnkey ready and I just did the numbers if I sell to them, I can make about $35K on each at 90%. Should I just do that and get rid of them if the offers are accepted? 

I know I am jumping in head first on this, but if I don't grab these, someone else will. TIA!

[Roger J]

First, if these are REOs, then you will not be able to assign the contracts, period.  The seller's contracts/instructions will specifically say that assigning is NOT allowed.

Second, assuming that $700K is retail, the max that you should be paying for this is $490K, especially if you goal is to assign/wholesale.

Third, assuming that you get it for $550K and do a double-close for $700K, your estimated closing costs (based on 3% of the price) for the first (the buy) closing would be aprox $16,500.  On the second (the sale) closing, it's $21,000.  Total closing costs $37,500.

Raj

[moonstruckprincessa]

Thanks for making that clearer for me. I'd be making more than I thought...LOL! On the second, should I leave the offer at what it is, or simply leave the deal alone for now?

Someone on another board told me to wait out buying until the impending bloodbath comes....

[Roger J]

Maybe I've missed something.  How do you intend to make more if your intended profit is $35K and your closing costs alone are $37K+?

Have no idea about the 2nd offer (assuming the $675K) since no other figures were given.

Raj

[moonstruckprincessa]

Thanks for the answers, but it's a moot point now. The banks don't want to accept the offers. They seem to be confused as to what year it is and don't realize what is going on in the market now.

[Garfield27]

What city are you in?  and how big are these properties?

[ttandoc]

I haven't done this yet, but base on some inverstors i know, you could buy the REO on a Trust, base on how you explain the advantages to the Bank. They won't mind because you will be giving them the cash. Then sell the benificiary interest to other cash buyer. This will solve the  double close and transfer tax issue.

[moonstruckprincessa]

I'm in Los Angeles and the banks are asking outrageous numbers. They turned down $515K on a property worth $400K (my offer) MAX.  They are insane.