How do I submit contracts for Bank Owned Properties?


I have identified several bank owned properties to include a few pre-lists and I wanted to submit offers but was told that I can’t do an assignment of contract on these properties. Can anyone explain the steps for bank-owned properties and how the deals should be constructed so I can submit a contract? Also how do I locate investors willing to purchase these type of properties? Are their websites to locate wholesale buyers? Also, how would the deal be constructed on a HUD-1? Lastly, on these properties what is the lowest the bank would accept? Could I offer 70% or is there another formula? Thx

It is not too surprising that there have been hundreds of readers of your question yet no responses. Your questions show that you are relatively new to investing this way but how in the world will you learn anything without asking questions?!!

I’ve flipped nearly 400 houses in the past 22 years and can give you some answers and insight on your questions.

Regarding assignments, most of my experience with banks shows that the banks no longer will accept contracts with assignments. I think that is a poor business decision by the banks but that’s what they do. Anyway, there are two viable options to overcome this issue:

  1. Put in your offer your intent to resell and obtain an agreement to be paid via invoice for your agreed price with the bank and the subsequent higher price brought to the bank by your buyer (who would have been the assignee). Then the bank could exchange your lower contract with the new higher contract plus your invoice for the difference. On the HUD 1, your invoice fee would show up in the same section as real estate commissions would typically show and you would receive a check at closing from the proceeds of the funding.

  2. You could negotiate the acceptable price with a closing date in mind. Have your buyer/investor lined up; then find a closing agent who will still do simultaneous closings. I personally have not needed to do this in years but I’ve done dozens in the past when needed. Essentially the second closing (with the funding of your investors) is closed first, in escrow, then the first one with the bank is closed and funded.

Your question about finding investors is where you find the ‘genius’ behind any deal for a wholesaler like yourself. If you have investor funds, you behave as a cash buyer and can be a powerful negotiator. There is no magic resource. Personally, I’ve found more times than not that REI Clubs around my city have more ‘tire kickers’ than investors with money but you could find some there. You could advertise for investors but that still requires building personal relationships over time to get the funding you need. You will need to do some networking and build relationships…although this is a simple business, it takes time to develop your resources…it is relationship building which will be the key to your success in this area!

Regarding contacting, I’ve personally used the listing agent to submit offers. I’ve had agents tell me the bank will never accept such an offer. My response is that they have an obligation to present every offer or they would jeopardize their license. My offers are accepted or I get counter offers. You will find with time and experience which banks will discount more than others…I believe it is trial and error that will eventually help you with the question on ‘how much’ to offer or what formula to use.

You never know what the bank will do as they do not want to own property nor do they want a non performing note sitting on the shelf…it will irritate their stockholders. Make unreasonable offers…you can always come up higher if needed. I made an offer to the bank’s listing agent for full asking price (which was still nearly $100k below retail), bank convert the existing defaulted loan to a 30 year fixed mortgage and a 7 year balloon at a low interest rate. Also, contingent upon them adding a one time, non qualifying loan assumption (for me). The agent said they would not accept such an offer…I told her to make it or I would notice the real estate board of her violation of license. Within 3 days, I received a call from the banks attorney to come in and close the escrow. They accepted my offer because they did not want a non performing note on the shelf plus I offered what they asked compared to all the other investors who were ‘low balling’ their offers.

Start small and get your experience on smaller deals. Then build up with confidence!

Hope this helps.


Rob in Atlanta…Very Good Post.

I too have done creative things to get the bank to accept.

One thing you might try for an assignment is wording such as:

" Without begin relieved of the liabaity for the contract herein, buyer reserves the right to take title in a name or identiy other than his own."

This says you remain liable for the deal, and some times they will accept…some will not…worst they can do is say NO…there is nothng wrong with trying.

I think there are lots of properties available to buy in real estate world. Real estate investing are identifying opportunities through careful research.

Rob, that was an inspiring and informative post…!

Thank a lot Rob for sharing your excellent views that is informative for me. I was also wondering the answer of this question. :slight_smile:

I like the concise way you define the steps and let the readers know what to expect throughout the process. Cool share :slight_smile:

Keep in mind, the banks still want to get these suckers sold, so when you see a property just sitting on the listings without any action, give them an offer. Chances are A LOT higher that they will accept a lower offer in this occasion simply because they aren’t getting any other interest and therefore, no other offers.