I do understand the difference between REO and pre-foreclosure. I have been intentionally trying to induce questions and comment to brainstorm and to learn new techniques. Confusing? Well, maybe … Even with “blip” I learned something from your earlier post. Do you think, it would be possible to utilize same process you would apply to foreclosure and REO? Case in point; both pre-foreclosure and REO requires negotiating with the banker. I’ve had some people argue that, pre-foreclosure: you would have to get the buyin from current homeowner and then negotiate with banker and you would have to get a buyin from listing agent before negotiating with the banker…
What I was hoping for is you experience in dealing with either listing agents and/or REO lenders. I got some from reading the post from REO. I suppose getting out there and spends some time with listing agents and lender will give me the real world view and experience.
BYW, its’ hard for me to read book because I am a hand on person and have A.D.D. or maybe just lazy ;D
To your original point, cash generally rules. The majority of REO’s are marketed through listing agents. Some do a better job than others. Most REO’s follow the traditional offer counter- offer model. Unlike HUD properties, REOs are more sensitive to supply and demand, days on the market, and property condition. Once your offer is accepted the institution that owns the property will put the terms into their standard contract. 99% of the time you’re dealing with the listing agent.
Many “pre-foreclosures”/ “short sales” are listed as well. They are normally more time consuming because of things like hardship letters by the owner, BPO’s, 3rd party negotiations (Mortgage Insurers), etc. I think it’s a misconception that these are better deals than REO’s. I’d like to hear from anyone who employs a “We buy homes” strategy. Often you get into short sale negotiations directly with the lending institution.
When I offer on bank owned property I work backwards into the offer price. I figure out what the property’s after repair value is and then figure out what I have to buy it for. In my market, I know most REO’s can be bought for .80 to .85 cents on the buck. Based on their list price, it either works or it doesn’t. I may need to anaylze 20 properties to find 2 that work for me. I’m careful not to get a reputation of low balling every offer hoping one might stick. I never low ball but have purchased bank owned for .30 on the dollar. You have to know when.
I have talked to homeowners and many times, they are not interested in talking to anyone … even if you have the silver bullit to help them to get out of their current situation with foreclosure. Most of them are either in divorce, lost job or due to sickness and investors are last person they want to get a call or visit from.
Good point about time consuming Pre-foreclosure process; you would have to get the buy-in from current owner then, you need to put short sale offer together and then you offer it to the lender. If you can sell the listing agent of the reason why the price needs to be less than what HE has set it at, list agent will find a way to sell your price to the banker. I prefer to talk to decision makers; but there is a reason why lender prefer to have the listing agent as the gatekeepers.
When you offer .80 to .85 cents to a buck, you are not just using a purchase agreement? What other forms are you using to justify the reduction in the price? Do you have boilerplate cover letter for each different bankers or ?
Yeah, .30 on the dollar is easy if you want real headache without a solid exit plan…
In regards to your post about my reading to learn about real estate terminologies was to push people to write their knowledge in responds to my questions. Notice how many people are viewing but not responding? More newbies than experts? I don’t know but I was hoping to get more participation to this post.
Let me tell you why… I don’t know if any of you checked on how many REO properties in your area but accumulation is getting more than ever across the nation. This brings opportunity!
I would like to hear from investors who deals in REO’s and your experiences and recommendations.
James
The real estate markets have changed in considerably in the last 6 months and the changing market will wipe out many investors and Realtors. The end for some and a new beginning for others.
SHAMATSO – Really?? Wow, I didn’t know that. There’s lots of foreclosures? Hmmm…
I said - go take some courses - many are live, others are audio - no reading there - just listening and learning. Join your local REI club. If you think people are going to give you all the answers on a forum and then you can go out and make a fortune in RE, you need to re-evaluate.
I’m not being harsh, just realistic. You scare me. :o
You can’t read a forum, glean some info and battle stories and go out and do REI. Well, I guess you can, but you’ll make some huge mistakes - huge mistakes.
So if this period of RE instability will be a new beginning for you as an REI - why not start it with real knowledge and education? instead of a few forum posts? Just wondering… ???
I don’t think you understood what I am leading to…
My intention was to stimulate conversations between people who could talk about their experiences. I have taken couple of real estate investing courses and been a real estate agent, not to mention member of (2) REI clubs.
Ok, communication was not my major but I am trying to do best I can! :-\ I should have someone else type my thoughts and intentions.
I am doing very well in real estate investing but market is shifting again. My thoughts are to market exclusive toward REO because of the vest large amount of the inventory. I can see by the housing index that, if FOMC decided to pause or stop rasing the interest rates, market will push the prices higher again in a short term. With that, I am trying to get inside information or someone who had successful (60%) rate in acquiring REO properties.
Do you people invest by the market shift or do same process over and over? I understand that market doesn’t changes overnight!
dwan bent-tywford and sharon restrepo do a great job explaining short sales- soup to nuts, bery question answered. they have a few short articles on this site. i highly recommend their products. their programs are very thorough, and all your questions are answered. the only guru program i ever bought that didn’t disappoint.
ps no, i am not getting commission:0
Lainfla: Ok, one of us is confused… and I am afraid, it’s me… Original subject was for me to find REO property specialists, not short sale specialists. I think there were prior post about the differences… Appreciate your comment and info.
when you say previous foreclosure cost do you mean the costs associated with the foreclosure such as legal fees, carrying costs, loss of money or do you mean what was actually owed on the property?
In another words if i offer what the bank paid for the property do I stand a chance or is it basically based on BPO
I am a realtor who works as a Buyer’s Agent, that means I work with investors to help them buy houses. So, I will answer from my perspective.
I just completed a REO transaction, so I can give you some recent info.
The TargetHome was on the market for awhile, and we were watching it because it was priced too high. I checked public records and learned that another investor had picked it up at a foreclosure sale - and paid more than we woul dhave paid for it…time to wait.
Recently, it came back on the market, so we checked it out - bank owned now. I updated my research and helped one of my investor/customers pick a sales price.
We purchased the property for $145k (56% of arv) on a home worth about $260k (based on comps). The last time it was for sale at $175k - too much…it needs lots of work…
I hope Im not goiing to get slammed for this, but perhaps he needs to get a course or attend a boot camp on Short sales and get an education. the boards are for questions and discussion, not a full blown training session.
For the record I have done several short sales, but not been successful at REO’s because banks want retail price and there is always a greater fool out there willing to pay it.
So you are saying that paying for a real estate education for everyone else is ok for us but you want us to regurgitate the info back to you for free, in posts, so you can learn off of our experiences and training, time spent and money?
I doubt you will get far, I know your type. You will be out of the business in 6 months, but not before you buy some dog properties
I dont know Linda. Isnt that what people on this board do? Share the knowledge that they have gained over the years regardless of how they obtained it? I guess if the seasoned investors felt that way, all these posts would have big 0’s next to them.
As far as what I’ll be doing in 6 months? I doubt I’ll be out in 6 months. I’ve done fairly well in my current business and I started that when I was 21, had no money and fairly no knowledge of the industry (office equipment). I’ll be sure to email you a copy of all the REI checks I get after 6 months
You’re both right you know. Some people can learn very well through these posts and researching online and reading - while others feel they need the structure of a course. So you are both right. The problem arises when you don’t know yourself well enough to pursue the correct educational path.
when you say previous foreclosure cost do you mean the costs associated with the foreclosure such as legal fees, carrying costs, loss of money or do you mean what was actually owed on the property?
In another words if i offer what the bank paid for the property do I stand a chance or is it basically based on BPO
It’s based on the BPO. But the BPO’s can consist of several valuations. I’m seeing more companies list at what the “repaired value” is instead of the “30 day as-is quick sale”.
Example:
One of my REO listings 30 day quick sale value was $37,000. My 60-90 day repaired value was $59000. The house listed for middle 50k as-is. A freakin joke.
There’s lots of foreclosures? Hmmm…
