Re: NEED HELP: FLIPPING BANK OWNED PROPERTY - Posted by SCook85
Posted by SCook85 on January 19, 1999 at 13:04:45:
I can sympathize with your dilema this is what I went through all the time before. This is how I addressed it.
First of all it is not the realtor that is requiring it of you but instead the bank that owns the property. Not all banks require it but enough of them do warranting a solution.
When I first started I was making offers on the homes that did not require proof of funds or prequalification letters. I bought my first home with $200 earnest money. Most of the time there is no minimum for earnest money deposits. I know that Freddie-Mac and Fannie-Mae require $1000 here now and only one other bank has a minimum of $1000. The rest I tell $500.
I used to put my offers in on Letters of Intent. This allowed me to negotiate the deal and have it accepted prior to doing a contract and having the money. The way the process usually works is this.
I make a lowball offer on a letter of intent.
A week or two late I get a counter offer.
when I get the counter offer I start marketing to other investors knowing what my worst case scenario is (by the way if there was a realtor sign in the yard it is gone by this point, hidden in a bush or something).
I come back with another counter offer to buy time. Usually a thousand dollars more than my original offer. If I find an investor that wants the home and they tell me what they will give for it I line them up with the deal and they just pay me and the earnest money deposit. I did this for $1000 a deal when I first started. I have an understanding with 3 investors who will do this all day long with me. Basically I was bird dogging.
Now I put down my own earnest money deposit and I have 3 prequalification letters from private investors. Prequalification letters are easy to get. They usually aren’t wotrth the paper they are written on but banks who right them themselves want to see one. I can’t figure that one out.
Hope this helps. Good luck!!!