I have found a great house to flip in my target area. But since this is my first “flip”, I am a little nervous. The house is an REO, owned by the local credit union. I am meeting with their RE agent tommorrow. I have looked at the outside of this boarded up house and plan on making a very low-ball offer. What if the agent says that the credit union will not accept it? Should I contact the credit union directly, since they are local, or move to the next deal? Comps in the area are in the $250k area and home was foreclosed on a $170k mortgage. House needs lots of work just on the outside, unknown about the inside until tommorrow afternoon. Thought I would send this out to the guru’s on this site. Thanks in advance for any advice.
Ken
Make the offer based on what is right for you. This is business, so there is no need to personalize this or worry about offending anyone, particularly some lender.
If they don’t accept the offer, you can always up it, (assuming you started out well below your actual target price anyway), or you can move on and revisit the issue in a month. Time creates motivation, and with the market the way it is today, lenders are becoming motivated.
And do not go around the Realtor to contact the seller directly. . .ever. Bad tactic, and one that will get you a bad reputation in no time.
Just make your offer. It doesn’t matter what the realtor tells you about what the credit union will accept. They really don’t know, truthfully. Maybe the morning of your offer, the CU mitigation dept was told to move the properties asap, and then your offer comes in.
So do what you need to do, and submit through the realtor. If a prop is listed with a realtor, in all likelihood you would not be able to deal with the bank directly anyway.
If comps are $250K and this thing needs a ton of work your not going to make money on this. In MOST markets right now prices are weak or falling, don’t forget that. I price all my flips UNDER the comps by 10%. This moves properties.
Make an offer that reflects the changing market and protects YOU. If they refuse it, wait 1 month, and then drop your offer by $10,000.
Yes, you read that right. DROP the offer. Banks work on time decay, the longer they own a property the more likely it is that a time will come when their mitigation dept. asks for ANY qualified bid. If yours lands on the desk at that time you win!
I have bought homes for $50,000 less than my original offer because the bank decided it was time to pull the plug. The realtor gets paid either way, remind them of that if they snicker at your offer.
I usually present an offer to the agent with “Here it is… If they take it great, I’ll give you back the listing the day we close, if not I’m on to the next one” This way the agent has INCENTIVE to get your offer accepted. Don’t have any illusions here, there’s only so much and agent can do, but a phone call to the bank saying " I haven’t got much action on this place, this guy is ready to go, can close in 10 days" vs. " I’ll send it over but your not going to like it" It can make a differance.
i also have a question abou t workin with a realtor who sells reos.
the realtors I’ve worked with in chicago want me to have proof of funds and
earnest money. If I am to wholesale the property how can get around this requirement? :banghead
They tell me that the bank won’t accept my offer without this info.
how long does it take to get pre approval letter from a private lender?does anybody know? to show the re agent as proof of funds.
don’t let realtors jerk you around. when i was starting out i got a copy of a bank statement from a friend who was loaded. that was my proof of funds. it worked fine.
anymore i won’t even deal with realtors who don’t want to work with me. there are so many realtors just move on to the next one. try the old ron legrand line “if you’ll show me your financial statement, i’ll show you mine” or something like that.
THANKS WAS GOOD ADVISE.
thanks for the advice rp. I think I will try using a friend with money. If that doesn’t work I can always fabricate a bank statement, but uh i’m not really into lying. :smile
I am a Realtor and I have to say in the state of this crisis. I only dealt with Preforeclosure/REO’s and now Banks will only see serious people. So if you cannot produce POF or have a deposit in on time. They will not budge as it they will sell at some point. We as Realtors too move on as well onto the next investor. I have over 20 Investors that I work with and they know the procedure. Banks do not want to take another fall in case you cannot perform. So they want to make sure you can carry this and not waste or tie up the property. It’s not as it used to be anymore trust me. See below.
I have a deal that is falling thru as we speak I have the last appraisal 11/06 for 34 Mill but I advise to get another done. It will appraise between 25-30 mill for sure. It is in California.
After weeks of negotiating I finally got them to go for 19 mill FIRM!. What is required is 200k down POF and closing less than 30 days. This is what is REQUIRED per bank/court…not me. My guy is having trouble getting the POF from his bank. THE BANK/COURTS REQUIRE THIS with the offer or they will simply not look at it. I presented 2 offers and they will not budge.
Thanks
Damian
Re/Max Advisors
Thank you Damian. i kinda figured that this request was not a decision made by the realtor. The guy im working with is very professional and he doesnt strike me as the type to ask for more than what is needed.
thanks again damian :beer