Process Question

I am a newbie and think I have found a good deal. I have an REO that I could purchase for 100K, the ARV is $187K. I have two questions, will a hard money lender give me the entire purchase price and what do I do next? find an offer to purchase agreement from an attorney with the appropriate exit clauses and deliver asap? Just need some answers before I dive into this head first. Much appreciated if you can help. :help

You need an exit strategy. Does the house need work? Will you flip? Will you hold and rent? Do you have another strategy?

The house doesn’t need any work, it is a foreclosure in really good shape. I plan on doing minor touch ups to it and putting it on the market.

Mr drink wine,
Do you know the sellers and have you spoke with them ?
How much is the loan balance, what are their payments ?
Do they include taxes and insurance ?

This could be a good sub2 purchase.
Mr Holy Water,

The bank owns it, they are asking 112K now but at the rate they are coming down, 100k could take this. Like I said, I am new at this. If they take 100K, what do I do next? Write an offer? Do I have to have a pre approval letter to even do that? Thanks, obivously I have never done this before but I think this is a good deal.

If they are looking for $112k offer them $80k. :slight_smile:


Is the property listed with a realtor, or are you negotiating directly with the bank? I also have found several good bank owned houses that would make good investments. One property was foreclosed on 5/04 and it’s still not listed with a realtor, and this will be my first attempt to purchase this route. I want to be informed about all the steps dealing with the REO officer at the bank.

Wow, just offered them 94K and they came down to 105K. I think it is time to put together a offer to purchase. Does anyone know where to get one with the appropriate escape clauses? Also, can I write the offer contigent on financing and then find the hard money lender? Anxious to make this one happen.

Do you have financing available yet? If not, call a broker and ask for at least 4 quotes from different banks and choose from there. Also, talk to the bank and ask them if they’re willing to do the financing for the home. Most contract are contingent on the financing, if I have a client I’m working with and the financing doesn’t go through for what ever reason they’re normally let off the hook. Read everything carefully, especially the fine print. If you need a second set of eyes, or more advise please don’t hesitate to ask for help.


I talked to the banks and they are willing but they want 20% down, my credit score is 620. i talked to a hard money lender and he offered the following.

100% of cost plus repairs, not to exceed 65% of the After Repaired Value.

Loans from $32,500 - $250,000. Minimum FICO only 575. Metro areas only. NOO only. Rate 13.88% plus 4 points.

I don’t understand the length of the loan (i suppose until i sell the house) or what the additional 4 points means. I need to figure out the montyly mortgage so I can see if I have enough to carry this note until it sells. Thanks for helping me decipher this.

Points are a charge that is equal to 1% of the total cost per point. 4 points = 4%. If its $100k loan, 4 points = $4k.

Are they offering interest only payments? Make sure you don’t have a pre-payment penalty.