So after some research Ive seen that its a good idea to include a cover letter that outlines your offer. Ive contacted a listing agent on a couple of REOs, looked at the properties, and then I told her about my intent to include a cover letter with the offer, heres her reply, what do you make of it?
“What you are doing is not submitted with an offer. After I have a contract I submit it online with any conditions and proof off funds or financing. If it was a traditional owner occupant that would be something that could be added to an offer. Real Estate Owned properties are just numbers in forms with any comments for any contingency. They know the conditions of the property from all the reports that have been done. So, you just need to figure out what you want to offer and we can write it up if it is within reason”
I wouldn’t worry about a cover letter. We’ve bought foreclosures from the bank directly, we’ve done HUD houses from a website, and we’ve bought other foreclosures from the MLS. I’ve never worried about a cover letter.
The last sentence about within reason…she’s required to submit any offer you give. Many cheaper REOs have a flat commission that’s above the standard 6% anyway.
Your agent is correct. There is no need to submit a cover letter with your offer. When a lender is concerned, all they are looking at are the numbers. They could really careless why you are offering the amount you are or what you are going to do with the property. If they counter, and usually they do, you may wish to submit a contractor supplied cost sheet detailing the required repairs and other comparable sales if you believe that they price is way off market - but usually it doesn’t make a difference either.
Thanks guys, what I meant, and maybe I wasnt clear enough, and maybe “cover letter” was the wrong term to use. What I wanted to include was just an outline of the offer. The number, contingencies if any etc. Basically so they didnt have to ruffle through the whole 15 page contract to see what Im offering.
Both real estate agents and lenders with REO properties realize that 14.5 of the 15 pages in a purchase agreement is legal “fluff.” They know exactly where the important sections are located. This is especially so if you are using a standardized form. As long as you put your contingencies in the proper location on the form, it should not be a problem. Regardless of the letter or summary you provide, the seller is still going to go through all 15 pages to make sure there is nothing “hidden” in the document that you perhaps “forgot” to reveal. Sometimes, simpler is better.
As Justin and Casmpbell bot said…if you are going to try a contact with loads of WEASEL CLAUSES,why waster your time…the lender is not going to accept somethng that says if you sister in law gets pregnant you can get out of the deal…be up front, honest…toe the line… if you want the deal…be prepared to do the deal. BO NOt look for ways out!
Clauses in a purchase agreement are there to protect the buyer against unexpected findings. If the buyer finds out that the bank declines financing, the buyer should be able to walk away. If the buyer has a home inspection and finds out that the foundation is cracked, then the buyer should be able to walk away.
If a wholesaler cannot find a buyer in time, then he or she should be able to write a purchase agreement that allows them to back out.
Bill H, I do not consider these as “Weasel Clauses.” A good wholesaler knows how to word a document in such a way as to facilitate a transaction without setting everyone into an uneducated panic.
(BTW Bill, you may want to check your spelling and grammar before you hit “post” if you want anyone to take you seriously.)