How Do You Make The First Offer on REO!!!!!!!!!!!!!!!!!! - Posted by Erich

Posted by guru on April 05, 1999 at 22:36:46:

Several CS concepts come to mind:

  1. The multiple offers
  2. Get to know the owner & find out what they want
  3. Make your offer a creative way to give the owner what they want; i.e. perhaps some zero coupon bonds for a college education for the owners kids or offer to buy on lease-option contract so the owner gets you fixing the place up with no cost to him (if you screw up the contract,his propertyis worth more so he makes more.
    Perhaps you need a partner??
    Good luck regardless of what you do

How Do You Make The First Offer on REO!!! - Posted by Erich

Posted by Erich on April 05, 1999 at 22:16:33:

I hunted down the owner of a three bed two bath eviction in town, then discovered it was listed that day by a local real estate agency. The house is empty, garbage and drug needles everywhere. THe roof has been leaking and the agent wants to sell as a scraper. Three years ago the house appraised at 179K in a good upcoming neighborhood, I think I can get the property for 80K. THe damage isn’t as bad as the realitor says and I think the repairs are sheet rock and flooring with a new roof. We are waiting for the bank to make its apprasial.

THe realitor says one other person is making an offer. How do I ensure my offer is the first and final offer? My market is extremely competive and lots of investors are looking for a deal.


Re: How Do You Make The First Offer on REO!!! - Posted by Irwin

Posted by Irwin on April 06, 1999 at 09:16:32:

When you say this is a REO, that means it is now owned by a bank or mortgage company. If that is the case they want to be cashed out. If you’re an A credit buyer, you might offer 20% down and ask them to carry a new mortgage(only for local banks)or give you 30-45 days to get a mortgage somewhere else. But keep in mind that you will (possibly) be competing with offers of immediate cash.
The 3 year old appraisal is not worth much. I doubt that a bank would sell a $180k house for $80k, even if they’ve overestimated the repairs. (Water damge repairs always end up costing more than you estimate.) Get current comparable sales for the as repaired value. Also, you can look up the foreclosure proceedings and/or the recorded mortgage to see how much the bank has invested in the property.
Do your homework quickly, but don’t let the Realtor rush you with the “another offer is coming in” story. It may be true, but it’s also the oldest sales trick in the book. There’s a reason that the $80k figure was tossed at you. This is a problem property. If you don’t have the cash, start looking for a backer now. If the profit margin is what it appears to be, you shouldn’t have too much trouble finding one. Or, just tie it up long enough to flip it.
Good luck!