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.