Making an offer on an REO. - Posted by Jennifer-NC

Posted by Wayne-NC on May 01, 2007 at 21:21:34:

OBX, yes. Shoot me an e-mail. I can talk some shop.

Making an offer on an REO. - Posted by Jennifer-NC

Posted by Jennifer-NC on May 01, 2007 at 01:43:39:

Found a house I want to rehab. Brick house in decent neighborhood, 1 1/2 story brick built in 1950. Beautiful on the outside, new-ish vinyl windows and trim, good roof. The inside needs to be gutted, though. Holes in the walls, stink (the smell of money), mold everywhere, total neglect. I finally got in today with the realtor, and he says “it needs 10-15K in repairs on the inside”. He also said that they’d had alot of “activity” on the house, several offers between 24K and 31K, and the bank accepted none of them (Ocwen, BTW). The house is listed at 39,900.

The ARV for 2 br/1ba (which is what the ground floor is) is around 80K. If the upstairs is finished with two more bedrooms and a bath, making it a 4/2, the ARV is around 115. The walls and floor are already there.

Upon inspection, I found the walls covered in black mold. The ceilings were ok, didn’t look like major leaks from the roof. In the kitchen, the part of the floor under the sink and cabinets was caved in/rotten. Within 15 minutes, I had a horrible headache.

After the realtor left, I looked into the crawlspace and found about a 1/2 foot of water standing there.

Obviously, the house needs much, much more than 10-15K in repairs. Probably more like 50K. I need to get it for around 20K to be where I want to be. Of course, these are all rough estimates, pending a real inspection and estimates by professionals.

I honestly don’t think the bank knows what bad shape the house is in. Everyone who has offered and been turned down has walked away.

What I’m wondering is this. What if I offer something that I think will be accepted, say $34K or so…contingent on inspection, of course. When I have the inspection report in hand, pictures, and PROOF of the major problems with the house, then try to negotiate down to where I need to be. Has anybody ever tried this to get a bank to come down to their price on an REO? I just don’t think Ocwen knows what a junker this house is, especially if they’ve been listening to the listing realtor who thinks it only needs 15K in repairs.

I have to admit, I’d rather not deal with a house full of mold and a flooded crawlspace, but I hate to walk away from a challenge. This house is in a good area, and I would get a great deal of satisfaction from making this ugly duckling a nice home for somebody.

Thanks in advance,
Jennifer

Re: Making an offer on an REO. - Posted by Wayne-NC

Posted by Wayne-NC on May 01, 2007 at 07:05:06:

To me it SOUNDS like just land value. When you put a dress on a pig blah, yada, blah, yada…etc. For comparison purposes or even for serious consideration, look at the possibility of salvaging value from the house and then removing. At the same time a new 4/2 modular could be under construction at the factory. Also, see if the same bank will finance the project. You could conceivably have a new, income producing structure there in 90 days instead of 9 months (or so)! Ofcourse there are both pros and cons on modulars which have been discussed at length somewhere on this board (but that is another story). I know, I was there. I’ve done 3 and I like them. Remember, time is money too. Just my sight unseen thoughts.

Re: Making an offer on an REO. - Posted by lukeNC

Posted by lukeNC on May 01, 2007 at 05:43:42:

I would let that realtor know about the standing water down in the crawlspace and what a problem it is. Maybe that will change things.

Once there is a house under contract as an REO with a bank, it is very difficult to change it.

If the realtor already knows about it and still wont budge, go ahead and submit your offer with the pics of the damage and see what happens.

Re: Making an offer on an REO. - Posted by Jennifer

Posted by Jennifer on May 01, 2007 at 19:30:50:

Having a hard time getting the archives to work for me…

How do you get a modular at a price that will cash flow? I looked at them briefly for another piece of land I own, and the prices seemed awfully high. Also, how do you sell them? L/O, owner financing, outright, or what? What modular company do you buy from? Who finances it for you? I’m really interested in knowing exactly how you do it. If you don’t mind, email me and run me through one of your modular deals. I would greatly appreciate it, and owe you one!

Jennifer

Where are you NC investors? - Posted by Doug (NC)

Posted by Doug (NC) on May 01, 2007 at 07:28:17:

I’m in the Raleigh area, an REO appraiser with many years of experience valuing foreclosures. Where are you NC investors located? I might be able to refer some fixer uppers to you.

Jennifer, the last REO I appraised that was in the condition you speak of, ended up being torn down because the costs to repair exceeded lot value.

Re: Making an offer on an REO. - Posted by Wayne-NC

Posted by Wayne-NC on May 01, 2007 at 21:23:37:

Contact me while you are on vacation and I will show you!

Re: Where are you NC investors? - Posted by Dean In NC

Posted by Dean In NC on May 01, 2007 at 20:58:32:

Charlotte here - -used to be in your neck of the woods in Apex. House that used to be my home is under contract. I’d love to talk with other in metro Charlotte if they’re on the boards.

Dean

Dean

Re: Where are you NC investors? - Posted by Jennifer-NC

Posted by Jennifer-NC on May 01, 2007 at 19:21:55:

Thanks, Doug. The more I think about it, the more I think that may be the case with this one. Then again, I could be suffering from “analysis paralysis”.

I’m east of you, in the Rocky Mount/Wilson/Tarboro area. After I do a couple of rehabs in my own area (because it’s in my comfort zone), I plan on taking on something in the RDU area. Definitely keep me in mind when you find an awesome deal that you want to send to an investor.

Re: Where are you NC investors? - Posted by Wayne-NC

Posted by Wayne-NC on May 01, 2007 at 07:41:45:

Those were my initial suspicions with conditions. Wayne-KDH

Re: Where are you NC investors? - Posted by nimesh

Posted by nimesh on May 06, 2007 at 10:00:09:

hi i want to invest my money. any one knows about any foreclosed motel/hotel property.please let me know

Re: Where are you NC investors? - Posted by Jennifer

Posted by Jennifer on May 01, 2007 at 19:23:59:

Wayne, is that Kill Devil Hills? I’m going to be in your neck o’ the woods on vacation later this week. It’s a long time dream of mine to live at the OBX and do real estate investing there.