Dealing with REO and BANKS

I am seeing as long as 30 days in most cases here in SE MI. I am not waiting around for them to answer and just continue to write offers. I have roughly 10 different offers out there right now some as new as a day and some as old as 45. The banks do not care about expiration date. They also don’t care if you try to play hardball with them. It’ doesn’t matter. I have gone as far as to add to my contract that "this offer to purchase has an expiration date, if an acceptance, counter or other can not be obtained within 48 hours of recept this offer shall be considered null and void. That has not helped. They just don’t care. The problem is there are so many $0 down loans 80/20 what ever you want to call them a homeowner looking at foreclosure really has nothing to loose. They do not have equity invested so they walk. The bank is left with a house that was probably mortgaged above real value anyway which is the banks fault. But never the less add on foreclosure fees etc and the bank is left with a debt that is higher than they could ever dream for getting for that property. Add to it also that the former owner trashes the house on the way out. So your left with a house priced at market values or very slighltly under and the bank is holding firm with that. Here in MI there are suckers out there and a lot of them that are paying these prices for these “fixer uppers”. So they purcase at MV spend 20, 30 40k to fix up and they are left with an over valued home again. So down the road when they can’t sell for what they have in to it the whole cycle starts again. It’s a joke. I am having a great deal of difficulty getting any offers through on bank owned home right now. In fact 3 months have written 21 offers and not a one has been accepted. I’ve had some rejections some unreasonable counter offers but no acceptance. I keep on keepin on and will hit pay dirt here before too long but thats the marekt here in beautiful SE Michigan. #2 Forclosure capital of the country.

Any inside info on how to deal with these banks would be appreciated


In reading your post, that is the exact same thing I am seeing in Central Iowa. My realtor told me not to put a date of expiration in my offer and I said I had never done that before. Why wouldn’t I do that? He said the bank won’t even look at it if you put 2 or 3 days on it, they will just let the deadline go by and file it in the garbage, whereas if you don’t put a date in the offer will probably get looked at sometime??? I have even tried to put addendums in listing all the damage that was done on the house before the owner left thus that is why my offer is as it is. I was told by a realtor whom I recently fired that it wouldn’t matter it won’t get submitted anyway. I said why it is part of my offer. It is part of the document I am submitting as my offer. I was told that they would be submitting it online and wouldn’t be able to submit the addendum. I said well could you fax my full offer including the addendum to the person, call and speak with them to be sure it got to the person it needed to and let me know. Oh, they didn’t do things that way. I asked a listing realtor how the asking price came to what was being asked for a home when there was so much damage done to it. He told me he had looked the home over and took into account the damage that was done and told the bank what he thought it was worth putting it on the market at. He said the bank most likely got a few other realtors opinions also before they listed it with him to be sure his reccomendation was accurate. I just don’t get it?

I have lost several properties that I have made offers on and the bank actually has gotten very close to what they are asking.

I don’t have any answers or advice on how to deal with what it going on-I just know there should be someone held accountable-ok? :stuck_out_tongue:

Wow do I feel better now!!!

Yeah same here. Although, thru persistence I have had offers go.
I am a realtor myself and also a builder. I know going into a home what it needs or doesn’t. Most don’t. Banks ask for the BPO (broker price opinion) Since when is your average realtor a builder or licensed contractor able to estimate what repairs will be? I think most brokers do their BPO’s to come at or near market value in order to obtain the listing. Do you think a bank is going to list all of their REO properties with an agent who lays out the God’s honest truth about what a piece of crap the house is and what it is really worth? Well in the mortal words of Jack Nicholson
“THEY CAN’T HANDLE THE TRUTH” So they all lie to each other and can feel good about themselves when they call it a day. Eventually the price will come down to reality. In most cases it takes them 4-6 months to figure this out and the bean counter sitting behind the desk in Iowa who has been rejecting offers for that 4-6 month period is finally repremanded by his bean counting boss and they finally lower the price to a lower level of being overpriced but it is much closer to the low ball offers they have been receiving and rejecting for the past 4-6 months.
What in the HE double hockey sticks does a bean counter in Iowa know about the real estate market in Michigan or any other area of the country for that matter?

Sorry getting carried away here…but whew I feel better too!

Doh…I just realized you were in Iowa…did not mean any offense…Its just that some of the REO properties I have dealt with the “bean counters” are actually in Iowa!

I am glad you feel better now too!! No offense taken! Do you feel like you have an edge on the market sometimes being a realtor? I really don’t want to go that route and worry about keeping licensed just to invest. Why did you become a realtor?

Where in Iowa were you dealing with “bean counters”?

Good LucK?

I guess there is an edge if I am buying for myself. I can do all the research myself. If I am doing work for one of my other investors I get paid selling the house to them and then they list with me and I get paid again when it sells. In that scenario there is no risk to me other than if the deal goes south for some reason. That’s only happened once and I told the guy not to buy the place. He went ahead and did it anyway. It’s still on the market this very day…it will be 2 years later in June of this year. Bad move!
I have things streamlined for myself and investors. Each morning I pull properties create a list make appointments go look take pictures and inspection notes for each property, come back do my market analysis on properties and put all the information on my server. Then send out one email to everyone I work with to notify there is new properties on the server. That way they can go in look at all the data themselves, pictures and make a decision as to whether they want to make an offer. It’s a really good system that has worked for me. My investors like it a lot too.

As for getting into real estate…hmmm. I was an engineer prior to this. With all the uncertainty starting several years ago with the automotive industry I was concerened. I had enough cash stashed away that I could take the risk and walk away. Building and housing has always been in the blood. I’ve got some family that are agents too. I have never worked with them though. Always been on my own. It’s probably better that way. I just love what I do! As far as having an edge, The only edge that I can see maybe is access to the housing before it comes to market with some properties. I can research very thoroughly. My investors love that and I feel good personally going into an investment that I looked at ALL the data. I’m not at the mercy of a realtor who may just be interested in making a sale. Another might be that I get paid whether or not it is myself investing in a home or an investor. Plus I love it and that’s everything to me! It’s not all fun and games though. I’ve had some pretty hairy situations with clients and it can be stressfull at times. But that comes with the territory.

I’m not sure where they were in Iowa. I just thought it was funny because I’ve always kind of used that cliche and the other day the realtor I was working with said that this particular account manager was in Iowa and what did they know about the market here :stuck_out_tongue:

Hi all. This is a very interesting and very real problem when dealing with banks. Here’s my question to you…why go after the REO’s anyway? The value isn’t there and they are very rarely a good investment. There are better ways to buy properties for investment purposes…either to hold and rent or to flip. Good Realtors know what is necessary to assist their investor clients to find the properties worth the investment but you MUST by very quick in your actions once the Realtor alerts you to the property. One hour later and that one could be gone.

Sorry to butt in…just that I’ve seen way too many people attempting to invest in properties that are not worth the effort. REO’s and Bank held property is not the way to go…too much effort for too little reward…just my humble opinion.

Best of luck!


Sounds like you really enjoy your job. You seem to have planned things out well! I was a nurse and decided to stay home with kids for awhile. My husband is in construction and we have always thought of rehabbing some on the side. Now I am still home with kids and do the real estate investment thing part-time by myself-husband is working too many hours to want to do this with me. Maybe I need to work on it more than just part-time. My goals for now are geared towards helping our kids go to college and for retirement. I am trying to concentrate on reading a lot and educating myself. I really enjoy rehabbing and flipping, and am trying to look towards investing in rental properties for long term investment.

It really helps to be able to sound off on this forum once in a while. Good luck to you.

Illinois Realtor
Here’s my question to you…why go after the REO’s anyway?

I guess lately my reason is that there are few properties out there for sale in the area I am investing in and the ones that I happened to be interested in for rental properties were bank foreclosure properties. I guess it depends on the deal as to whether it is worth it or not.


Very valid point. I believe it would depend on the area and loval market conditions. I’m an investor and a Realtor in the far west suburbs of Chicago. In my local market (northern Illinois) I’m able to identify motivated sellers via the MLS and determiine which properties will offer the best return on investment. REO’s are a tough nut to crack in this area…especially if I expect to receive timely communication from the banks. Time is money and the banks seem to take forever to answer anything. When they do, the answer is usually ‘No’.

If it works for you, that’s great. I sensed some frustration from those posting here and I was just cusious. Thanks for your reply to my post.


Wow! Wish I could type properly. Sorry for the ‘typo’s’.

Hi Jim,
You are correct, banks are tough to crack, it is purely a numbers game. If you throw 100 offers out there which I know you can admit to me it does not take much effort to create an offer and email it. I am pretty much down to a copy and paste system with writing offers on REO homes. I don’t request bank addendums or anything. All they need is a PA and an agency disclosure. All the rest is irrelavent until acceptance.

REO is not the only thing that I do. I have ways of sifting out “motivated sellers” that has been pretty effective as of late. There is also the handyman specials that have been easy to pick up as well. I would say REO is probably 25% of what I do. My frustration with that is the seem to be getting tougher to deal with. I think the reasoning behind that is they have their backs against the wall. They have made too many bad loans. They are choosing to gamble and ignor offers that come in to hold out for something better. As far as foreclosures go I think we are seeing the tip of the iceburg in comparison to what is coming. I think their decision to wait on a lot of these offers is going to come back to haunt them.
I have an excel spreadsheat that I keep data in. I track list price, FMV, %under asking, %under value, %sold under asking, %sold under FMV, days to sell to name a few of the fields. I am starting to see a pattern. Here it is…real example here. Last July I wrote a cash offer on a home that was listed for 239k. My offer was 175k. The bank balked lauged did whatever they do back. Well I tracked that home. It went off the market at the end of August. Relisted in February for 185k. Does that # sound close to familiar? I resubmitted my 175k offer and got the house. No fuss no muss we closed in 8 days. Why in the he double hockey sticks did it take them 7 months to figure out they were only going to get what I was offering them in the first place. I guess they just had to spend some more money??? You got me. It must be a bank thing. They are just burning there own briches if you ask me. So I continue to go after REO’s and right on average 5 offers a day. 25/wk 100/month and see a return on that time an average of 1-2 closings/month. I just question why they have to make it so difficult. They are only hurting themselves in the end. They need to concentrate on counting the beans and staying out of the real estate business. 8)


great points on the reo’s. My question to you is. (and I realize each market is different) from a # standpoint, what is the first thing you look at on an reo? from there what is your formula to calculte your offer? here in Denver,foreclosures are through the roof, and it appears the banks are sitting on more and more inventory.



hello, this is way off topic, but are you any reation to Stan Cihak?

who are you asking?

Hey David,

Amen to your last comment…banks should concentrate on counting the beans and stay out of real estate.


Stan Cihak? I’m sure but I think somewhere on the family tree we’re probably related. It’s obviously not a very common name. I appreciate your asking.


thank you :stuck_out_tongue:

The info in this thread is excellent for new investors like myself. I appreciate it being posted. I must admit that it is bad news though. I was hoping that with the growing inventory due to the increased amount of foreclosures, that banks would be willing to deal. News came out last month that the number of people who made late mortgage payments last year was up again. I have been following foreclosures through the register of deeds office and the public clerk of courts records. As has already been mentioned, the money that the banks are trying to recoup from these properties is ridiculous. They have borrowed above and beyond sane limits. Our local housing market is not that great (Central Wisconsin) and I was hoping that the banks would have some knowledge of this and be willing to deal. I was looking for REO property to be a key part of my investment strategy due to them being able to offer clear titles after the auctions. Realtors have showed me several REO’s and they’ve been quite scary. The amount of rehab required is tremendous - most of the places might just as well be dozed. We’ll see how all this goes. I am hoping that the bank takes back a property that I am looking at. The list of 2nd mortgages / judgments ect is lengthy, so I’ve decided to let the bank deal with it. The bank for this property is 10 plus states away, so this should be interesting…


Hi Jeff,
Good luck with your endevors! You would think by what is happening that they would be more willing to deal. It seems as though exactly the opposite is happening. To reiterate I think that their backs are against the wall. Most of the properties I am looking at are in a poor state usually having been destroyed by the former owner. It’s quite a shame. That I guess shows the calibur of people that were living in the home. Banks put their necks on the line with these “0 down” low down loans and there is nothing to loose when someone is looking at foreclosure. Again…it’s a shame. I will say that I have seen nice bank owned homes as few and far between as the are they are out there. But the bank is just more determined to get asking price in those situations.
The bean counters that are managing these properties 10 states away would do themselves a whole lot of good if they would get their head out of their ledgers and take a look at what’s really happening with the markets and to get an idea of what the real world cost is going to be to fix it.
They are the dummies that loaned the money out. We were all told as kids that there are consequences to our actions, bad or good. If they make bad loans, over appraise a home etc, well then there are going to be negative consequences.
I just submitted a counter offer on a home that I have been negotiating off and on for 2 months. I have submitted my final #'s to them. If they screw around I am going to walk. We were in a multiple offer situation, “get your highest and best offer in” they said. What a joke. Oh well, keep at it. It will happen! 8)


In making mulitple offers to REO’s, what would one do if he couldn’t make good on two offers that get accepted similtaneously. Do I lose the earnest money if it was required. Here in Missouri atleast, REO brokers state offers can have no contingencies. I want to make many offers, but am worried what would happen if 2 got accepted. I know its very unlikely, but just in case. Also, What is PA stand for?


Hi Darren,
You are not allowed an inspection on a property? What happens if you have one and find major structural issues? You back out of the deal and loose your deposit? That doesn’t seem right. You should be allowed to inspect and back out if the inspection reveals something.
Also there is a mortgage contingency. What happens if your mortgage fell through? They get to keep your deposit? My mortgage clause allows 35 days to obtain a mortgage if after that time frame a mortgage cannot be obtained the purchase agreement is considered null & void. I do not finance properties but work with investors that have and that is one out I use as well as the inspection.

Respond to this please and let me know if you do or are allowed these.