so I go and see about 10-15 houses a week , I have access to the mls so I go to REO properties , I walk in figure out the repair coast , find the ARV , use the 6.5 or 7 depending on the area minus my whole selling fee minus the repairs and boom that’s my offer , well the problem is the 20 offers I have sent in I am not even close to what the bank is counter offering with , my agent got yelled at by one guy who said I was just wasting both there time,
Question , is this normal , did I understand the formula right , wail I ever get an offer accepted? lol
If your giving offers on pretty houses it’s going to take more offers to get one accepted. If your giving offers on ugly vacant houses that need lots of repairs you won’t have to make as many offers to get one accepted.
Plus, let’s say you had to give out 50 offers to get one accepted and you made a $20,000 wholesale profit. Would you really care who says what. Don’t listen to negative people. They aren’t doing what you are trying to do.
When it comes to REO’s you want to make sure you are in the “ball park”
If an REO is listed for 150K there is NO WAY they are going to take an offer of 77 even if the place does not 20K in repairs…
THe key with REO’s is to JUMP on the ones that are listed close to the prices that we need to get them for…
the problem is that EVERYBODY and their mom is doing the same thing
the way to overcome this is to get in good with an REO agent who will basically set you up with properties that will fit your criteria right out of the gate before the rest of the crowd can get to them…
Typically I stick with offers on private sellers
but REO’s can def work as well
The difficulty you’re having is why you should always deal with the seller as stated above… Even if buying Shorts… REOs have had at minimum two BPOs done already. One at 60 days late and one by the REO agent… It is extremely rare that you are going to convince the REO agent to tell their Lender client that your offer is acceptable when they have told the lender what they think the value is… And if buying REOs at a discount dont use your own agent or at least dont have your agent send with your off a commission agreement. Let the listing agent earn all of the commission… Pay your guy outside of escrow…
REOs are great if you plan on renting the property… Very hard if you plan on flipping…
REO’s can be had at great prices. You really do need to keep at it and eventually you will snag one. After that it gets easier because you have proven it to work.
99% of the time the bank will not even remotely consider taking an offer for below 10% off the list price. As was mentioned above, sometimes they do get listed where you can get a steal at or just below the list price. People do tend to come out of the woodwork for those for obvious reasons.
There are two ways around this. As was mentioned above, work at building relationships with the agents that list REO’s. This will take time. Don’t rush it. They have people contacting them everyday trying to be their friend so that they can get fed the sweet deals. You have to set yourself apart from this annoying crowd by offering something of value to the agents and their offices. Be creative.
The other way is to only make offers on REO’s that have been on the market for about 90 to 120 days or more. The banks are more negotiable at this point.
Hope this helps.
You are doing things right!
You’re going out there and making offers which puts you way ahead of the real estate investing career student.
So good job.
As mentioned, there is a lot of competition out there with folks bidding up these prices like at foreclosure auctions due to the sheer number of buyers out there.
Remember, there is a reason why the banks do what they do. They calculate all of this.
Here’s what you do:
While you’re out there inspecting your REOS drive that same neighborhood looking for vacant houses and make contact with private home owners.
This will increase your acceptance rate 500% because many times as I have experienced it myself you’re the ONLY buyer.
Now what kind of a deal can you do then?
You’re also welcome to an Excel Property analyzer Free on my website. It gives you several scenarios on how you can purchase a property.
Yours for the asking
Well you certainly are staying busy. 10 - 15 properties per week is awesome and I’m sure you’ll find deals soon. Let us know if your persistence pays off.
The seller has to realize that they could get more $$$ if they fixed the home themselves, got an agent, and spent months after that waiting for it to sell. Time is usually on your side. When they want to sell and have plans for that cash, it helps you to get the property. People will understand that the work you put into a home will equal a profit for you.
Our sellers are looking for an as is sale and we let them know that we have to purchase at a price that will be profitable for us too.
I had this happen alot. I’ve offered full asking price and gotten a no without a counter or even a discussion. Seemed like they had no desire to sell the house.
That’s why you ask questions before you even offer any money. Like when would you like to get your money, Are you the one making decisions on this sell, why do you want to sell this property, etc.
Then I still make a offer on every deal but the tire kickers always balk, but you know that even before you offer it.