Down in South Florida, I keep a close eye on new properties coming onto the market as possible investment options.
Increasingly I see a new entry go into the MLS, I would go and take a look and be amazed at some of the great deals out there, but when I alert my buyer agent to call and arrange a showing, many of them responded with “There is a contract on this already, you can always submit a backup contract if you like”. Now if I ask to see the property first, they would refused because there is already a contract, they want you to submit a backup contract site unseen.
After I ran into this about half a dozen times a pattern developed. Talking to a few others it seems these properties already have a potential buyer lined up already, but in order for the bank to approve they are obligated to put the property on the MLS to look like it was “Active and Available for two seconds”. When you call them they would say it has a contract, but they kept it as “Active” for a few more days.
Anyone has any idea or comments with this pattern? Is it a good thing or a bad thing? Seems like it would be in the best interest of the seller and the bank to get the best deal possible, and to have pre-determined a buyer and closed it off for everyone else they are not doing that. I have a hard time believing the bank is aware that there wasn’t an open process to solicit the best deal. Is it done because the listing agent had a buyer lined up and he/she can take both ends of the commission and if they end up selling in the open market they most likely would have to split 50/50 with someone else?
As a potential buyer in these situation are there any suggestions on how to get the foot in the door?
I don’t suppose I could track down the actual asset manager for the short sale property and directly submit an offer?
Running into that currently too. Often the response I get is HBO! (Highest and Best) But when I come up over the top 10-20k it’s still not the best. Then last month my Agent came to me, with a SS in his pocket. I put together a cash offer and was ready to go. It fell through on the sellers end. But it is very much going to be a pocket sale. So my new strategy? Search MLS to find sellers of shorts that have closed properties, and get my agent to network with them.
Now that we are facing some upward pressure on price here, 12% annualized in the last 3 months, a short sale is worth the wait as long as I can get it under contract.
The best and only way to get a good SS is work with a good realtor that will let you have the SS before it hit the MLS, and yes the banks will list it on the MLS but it is already sold before it hit the MLS. We were at a realtors meeting last week and the SS issue came up and the realtors all had the same problem dealing with investors that the investors need 5 or more days to get the money or make a decision. When we buy SS we tell the realtor give us 3 hours to go out and look at the property and if we like it we make offer and then give the realtor a check for $5000 and if offer is accepted we deposit the balance in escrow within 24 hours.
I am a short sale real estate agent and I do this as well. Here’s what is usually going on:
The seller is trying to sell to a family friend or family member to keep the house.
The seller wants to stay in the property for as long as possible for free.
We have a real offer and we are negotiating it. At the same time, we are keeping the property on the market as active while negotiating the short sale. We do this to increase the days on market to prove to the foreclosing lender that we are marketing it to the best of our ability.
Now, here is how you should approach a short sale:
Know your market area. Don’t go by what the stupid real estate agent put as a list price.
Work with a real estate agent, but skip the agents. You want to approach the seller directly. Offer the seller something if they choose only your purchase offer. I suggest purchasing personal items. If the property is vacant, let the listing agent know that he/she can keep 3.5% and your agent will get the rest.
When you write the purchase offer, shove all cost onto the seller. Also, in regards to purchase price, you will need to look at the lowest 3 active and 3 recently sold properties and go some percentage below that number. It all depends on the price point. For example, if the cheapest home comp is 130k, then I suggest 30%, so I would make an offer like 95k. If it is 800k, then I suggest 10% and make an offer for around 715k. Also ask for 3% closing cost.
Just remember even if you make the deal with the bank a real estate agent must submit it to the bank on a SS and the bank will have the final say if they will accept your offer or not. It look like you want the bank to pay your closing cost. The bank will pay the realtor for closing the deal. A fair offer will get accepted.
Why not go directly to the asset manager? Or if someone has the contact someone above that person? Who knows maybe the real estate agent doesn’t represent the property. Maybe they don’t know who does? Sometimes its a wash unless you do all your own due diligence. The banks have gotten nothing but difficult to get anything done. But all you can do is continue to try different avenues at getting good deals on homes.
Sometimes dealing with the bank is better than dealing with the homeowner. Sometimes dealing with the homeowner is better than dealing with the bank. They have had rigged bidding going on. The trustees do produce fraud to the courts and upon American people there is no doubt.
Some people have made a real estate investor the last person to be. Its easy you know to be short sighted when you deal with so many different hats in the life of real estate. While some times its a convenience to pay someone that kind of money if one doesn’t have to why would they? I’m for people getting PAID but only if THEY WORK TO GET PAID! :rolleyes
You don’t make a deal with the bank. The bank is a contingency, not a party to the transaction. All your dealings are with the seller. The foreclosing lender then tells you what terms, if any, it will accept.
In short sales, there is no asset managers as the property is not an asset to the bank. The seller is still in charge. The seller makes the decisions. You control the seller in a short sale, then you control the short sale.
Just because you low ball the seller does not mean the OC will accept your offer. We go about it a different way on foreclosures we contact the bank and make a offer direct to the OC and then we evict the homeowner. In California we can have a homeowner in the streets within 30 days.
In a short sale, the property is owned by the seller. You cannot deal directly with the bank and simply evict the owner. Once the property has been foreclosed on and has been retained by the bank, then you can deal with the bank.
In regards to making lowball offers, it has to make sense and the foreclosing lender’s BPO has to come to the same values you present to justify such a low offer. You can just take a lowball number out of your butt and hope it sticks.