i spoke to my RE agent and she spoke to her broker. He said that contingencies where disregarded on REOs in the area. Mainly, because of mass offers from investers with escape clauses in them. He said it is possible to lose my EM if i back out of an offer. This seems a lil harsh to me aswell. I want to just send an offer with my pre-approval letter and a statement saying something like “buying as-is, but purchase contingent on final inspection”. I’m going to contact a few of the area banks REO brokers, to see what they have to say.
example of a REO listing near here:
"No contingencies, EM Certified funds, preapproval or proof of funds with offer inspections OK but no repairs will be made "
yes that’s harsh. I don’t submit any monies with my offers. In offer I put EMD to be deposited upon acceptance. Proof of funds submitted upon request.
Which accpetance is after inspection. I don’t deposit EMD’s with listing brokers either. I would check around I would say that it is either that particular broker or bank setting that requirement. I would also check with the RE board and state laws to see if that is even ok to do. I would think at the very least you should be allowed to inspect without risk. Check in to it and let me know I’m curious!
DKeith - I’m here in Meechigan too, except a little north of you in the Midland area. The abundance of vacant homes around here is becoming obvious and the notice of defaults in the local paper is longer than I have ever seen.
My last purchase was a foreclosure that was overpriced and sat empty for over a year. The bank had an unrealistic expectaion of what they could get for the house, especially in the neglected state it was in. The previous owner walked on a $128K debt, which was more than the house was worth. I submitted 3 seperate offers over 4 months before they accepeted. The weird part is that my final offer was $8,000 below my first and they took it ($76,500) My offer had a two week clause for inspection of all home systems (power was off in Feb, a little chilly) and the other assorted escape clauses. The bank agreed to split the cost of a 100 gallon shot of propane with me so I could fire the funace up.
It was like the bank all of a sudden came to it’s senses and decided to sell the home…Now. Their last price drop was somewhere around $10K, a big chunk. And that was AFTER rejecting two previous offers from me for more money (!?!)
Sometimes I wonder what it would be like to be a fly on the wall in the boardrooms of these banks, listening to their logic behind accepting one offer and not another, dropping this price and holding on this one, etc. Is there any sense to it? Good question.
Keep submitting those offers and something has got to click.
Hey Mike,
Yeah it’s weird! I just picked one up that I’ve had offers in on for 2 months. I just kept watching it. They recently took a chunk off 10k to be exact. I think that’s what is happening here. They finally come to their senses. I have been tracking a lot of homes over time and sooner or later they come back to planet earth. They could save themselves a lot of time by just getting right in the first place. I really don’t think they have a clue the condition that some of these homes are in. They rely on BPO’s. If you have 2 or 3 different agents trying to get the listing what do you think is going to happen? It’s going to get overpriced. The agents or brokers are going to try and buy the listing. That’s the way I see it anyhow. My success with these has been to submit an offer and sit back and wait. It’s kind of like an alligator floating around just waiting for something to cross it’s path and then jump on it. I am seeing a lot of these homes sell for asking price too. My only guess there is that people are buying to live in them. They sure aren’t buying for investment. After they get them fixed they are in a house that is probably way over value. It’s a shame. Poor representation on a buyers agent’s part. I’m sure they are selling there clients on the fact that it’s bank owned so it’s gotta be a great deal. Too bad. A lot of dumb people out there!
Like you there are a ton of vacant homes here in SE MI. It’s incredible. Things are starting to pick up quite a bit though. It would be interesting to sit in on the board meetings. I don’t think there is much logic. I think they really don’t have a clue!
Great info added to an aready great thread! Thanks guys.
For sake of update, in post #16 of this thread I said I was looking at a house up for auction that I hoped the bank would take back. Well, it never went to auction. I kind of suspected this would happen as the people have a huge record over at our counties clerk of courts. I figured that they knew how to play the system and that’s what happened. These people have had many Lis Pendens and Release of Lis Pendens judgements in just the last 5 years.
I sugggest you deal with the listing Broker direct. Sounds like your agent doesn’t know REO or her Broker. Typical. The bigger servicers have standard addendums, I highly doubt they will use a different addendum in a different state. The addendum gives the buyer an inspection period. They all do; well all the ones I’ve worked with. There should be no reason to write in your own contingency. You will screw up the deal. I haven’t ever seen a bank keep the EMD for loan denial. Actually, most are very relaxed when it comes to EMD. Granted you reasons are documented and reasonable.
Your example is accurate and common. Banks try not to mess with bogus offers. Agents fight me and argue about the copy of EMD required all the time. Don’t waste your breathe. It’s in our listing contract.
dkeith,
I’m amazed you are allowed to submit offers in this manner. The listing REO agents you put your offer in with do not give you any grief about this and allow it? My corporate listing contracts state how and what offers I am to submit. They almost all say that “no offer is to be submitted without proof of funds and copy of earnest money deposit”. That means if the agent doesn’t send a copy of the EMD with the offer, it doesn’t get submitted to the seller.
I can see where that really allows you to hammer the offers in. That would be nice.
yes that's harsh. I don't submit any monies with my offers. In offer I put EMD to be deposited upon acceptance. Proof of funds submitted upon request.
Which accpetance is after inspection. I don't deposit EMD's with listing brokers either. I would check around I would say that it is either that particular broker or bank setting that requirement. I would also check with the RE board and state laws to see if that is even ok to do. I would think at the very least you should be allowed to inspect without risk. Check in to it and let me know I'm curious!
REO, It is my job to protect my client above all else. Also in my personal deals I will protect my assets. I don’t give a damn what a corporate contract says for an REO listing agent. I’ve got the buyer, if they want to sell they will do business on my terms. I do not do a lot of deals that require a mortgage as I and most of my clients deal in cash. However if I do have a client that is using mortgage financing I will certainly submit a pre-approval letter with the offer. I will also provide proof of funds upon request. It is my intention to submit an offer, determine if they bank is interested in proceding and will then submit the necessary documentation when they request.
Please don’t take offense to this, it’s not at all directed towards you. I just feel very strongly about this and won’t screw around with listing agents that play games. There are too many fish in the sea as the saying goes, for every one agent or bank that wishes to be difficult there are probably 50 that accept my terms.
I don’t take any offense, this is an informational forum, but I am still amazed. Banks don’t change their rules for agents. I’ve never had one that would do business on the agents terms. I don’t know, maybe things are done differently in your part of the world. All I can say in mine, that would never fly.
I’m happy you’re an agent that wants to protect his client. Thats wonderful, that’s also what you should be doing. But, I am not sure how POF and copies of EMD are associated with protecting your client.
Bottom line, if that is how you are able to submit offers and thats ok with the seller, then thats great. More power to you. It would definetly be a time saver for submitting offers. I’m just saying that method would not work in my area. All my corporate accounts require I have those documents before submitting any contracts period. Agents that send in partial info do not get their offers submitted. But honestly, that has never been a problem if the client wants to bid bad enough, most are understanding to the banks rules.
Thanks for the post David, I learn something new everyday on here. Great info!
There is just no reason to have money exchange hands until an aggrement has been made and the house is been inspected etc. If I were to have myself or client write out an EMD for each offer there would be a lot of money floating around out there. Until I know they are ready to deal I don’t want private financial info out their either. You never know what can happen. So in that way I am protecting my client. There are also a lot of sheisters out there that like to get paid by keeping EMD’s. For that reason some of these listing agents want to hold on to the EMD instead of the conventional buyers broker doing it. They like to feel in control, and can make things difficult to get the money back. I don’t want my or my clients money tied up for weeks at a time.
One more note: I don’t have a problem of submitting a copy of a check (with account numbers blacked out) along with the offer. I also have a proof of funds letter for each person I work with that is submitted as well. Checks will go in to my brokerage’s escrow account though. I won’t deposit with listing broker.
I agree w/ you, deposit EMD with your Broker. Makes everyones life easier. Banks don’t care. Sometimes they will request the EMD to go directly to closing attourney, but really not a big issue. At least in FL, most of us smaller independent companies do not have an escrow account. Nightmare audits! I use my title company to hold EMD, makes my life much easier.
ok, so i’m going threw my first REO offer as I type this. I just got emailed, a 11 page sellers disclosure and a 12 page PA, that i need to sign and fax back. My Agent said a 500 dollar EM check would show that i’m serious. I’m interested in making multiple offers on several properties. I do have a pre-approval letter.
Like David said, i don’t want all this EM money floating about. So should i submit a check with the account numbers blacked out or just state “EMD will be deposited upon acceptance of offer”
Is this process normal? Multiple offers would take soo much time if this is how its going to be everytime i make an offer on an REO.
Darren,
They are faxing you docs to sign. A disclosure is normal to submit with offer and of course a PA is too. Did you already submit the offer on your PA? Have they accepted it or are you negotiating? I would not submit EMD until accepted. You can certainly write a check and submit a copy of it as I explained above but there’s not reason to deposit any money until your offer is accepted. That’s the way I operate. Of course you can do what you think is right and you do have your agent working for you.
We faxed them a copy of an Earnest Check, pre-approval letter. The PA is in with the inspection contigency. So all is well. I offered 60k on there asking 80k. I’ll go 65k, no more or i’ll reduce my newbie buffer i created. ARV is 100(low price). needs less than 15k in repairs. I overpriced all cost in this deal. profit from worst to best is 10k-20k asuming 4 months from bought to sell. I’ll let you know what happens.
I agree with you David. We only have to send in a “copy” of the EMD to the seller. The tricky part is in FL, we only have a few days to deposit the EMD in escrow. So as the Broker, I have to be very careful how long I hold the EMD before actually depositing it.
Yes, here in MI it’s the same. We have 48 hrs to deposit. The deal I did last week, I had the check for 7 days. But I did not have a fully executed PA until the 5th day of that 7 so technically it was in within the 48 hrs. That’s probably pushing it but if I don’t have a file to submit to my office there’s not much to do. I was waiting around for the bank to sign the PA. When I got it I created the file and submitted it to my office within the 48hrs.
Sending letters to the bank can work, and sometimes it ends up just taking a great deal of time.
I have been successful getting the properties from several lenders in the United States; many of which I purchase days, weeks and months after they recieved written offers from investors. Because of the number of offers they receive, I found the lenders tend to stick with the personal relationships they have, knowing these people will perform on the deal.
There are ways to make offers in writing that work better than others, what paperwork are you currently sending with your offer?
