Need more advice...Update on "my" REO... yet another obstacle! - Posted by Krista(WA)


Posted by Raiko on March 02, 1999 at 18:57:28:

As usual Mr. Piper has summed up the situation succinctly. He is exactly correct. Having purchased numerous REO’s over the last few years as both rehabs and rentals I know how frustrating it can be working with banks. However, your best bet is to write your offer and go on to the next one. That way you don’t become emotionally attached to any one property. The more offers you have out there the less attached to any particular one you will be. This puts you in a better frame of mind for negotiations should you get a counter-offer as well as leaving you with the feeling that not all of your eggs are in one basket. If you plan on dealing in REO’s (or real estate in general for that matter) you’ll have to get used to the situation you are currently in. It occurs all the time. Good Luck.


Need more advice…Update on “my” REO… yet another obstacle! - Posted by Krista(WA)

Posted by Krista(WA) on March 01, 1999 at 17:35:25:

Well, our offer is in? but it?s in 2nd position! :frowning: This is on an unlisted REO that took me 3 days of bank phone calls, etc. to track down someone who could tell me that it was assigned to an agent team in my area. I saw the property, the agent encouraged me to make an offer ?before it?s listed.? The next day I asked her to fax me some comps info, which she did. After I looked at a couple of them that day, and figured our offer based on our estimated fix-up costs the next, I was ready to make an offer ? but there was no one to take it! The agent who showed it to me had left town (for a week) Friday night, and her ?partner? didn?t return my calls over the weekend! It wasn?t until I finally caught her in the office (and not on the phone or with a client) today at noon that she casually mentioned that there was another offer in on this. I was quite surprised, and asked if this was since I had seen it, and she said it came in ?late last week.? She then tried to set up a time tomorrow to write up offer. I said I wanted to do it today rather than risk being any further down the list, and she said she didn?t have any time today. I told her I would come in and fill it out myself. She said that wasn?t a good idea unless I knew how to. I said I did. So I met with her briefly, she looked it over for me, and took our earnest money. She had me fill out everything with only the agent who showed it to me as the listing and selling agent (is this normal when they are ?partners??) She then said that the first offer wouldn?t be presented for a while because the bank/managing company wouldn?t consider any offers until they had the listing price established. She didn?t know how long that would be, but wrote March 15 as the tentative expiration for the offer. Is THIS normal? Of course, I could get nothing out of her about the offer or the person submitting it (investor, homeowner, etc). I just can?t help wondering if my message saying I wanted to present an offer went unanswered, and this one came in in the meantime! I never insinuated that as I did not want to put this agent on the defensive.

So how does this work? Our offer is low. Is there any possibility of the bank knowing what our offer is during negotiations on the first offer? If it is an investor, we might still have a chance, because we have decided we will move into this property, and therefore can counter up and ultimately pay a bit more than we or anyone else would as investors. However, if they know our first offer figure, it might influence them on accepting the offer that is in front of us if it is as much or only slightly more. (did that make sense?) In other words, is the agent, who is acting dually here, aloud to disclose our offer before the first one is accepted or rejected? Any other insight on how to handle ourselves in the coming days / weeks, and what to expect?


P.S. Please don?t anyone point out that I moved too slowly on making the offer… I can?t tell you how black and blue I am from kicking myself!!! I guess I had a false sense of security because the property was so difficult to track down!


Thanks to all who have responded! - Posted by Krista(WA)

Posted by Krista(WA) on March 03, 1999 at 02:11:39:

Your responses - both here, and by e-mail were very helpful! At the very least, I’ve got things in perspective. I still really want this house (for us to live in) and it will be agonizing waiting to see if we get it… but meanwhile life (and especially REI) goes on!

We did change our offer today. Up-ed it by quite a bit (20k)… but it would still be a great deal if we got it at that. Just not a big money maker right away. We would scrape by with conventional financing and minimum fix-ups (15k from the sale of our current home) until we were able to get a refi with good terms. Then we could finish improvements and eventually make at least a little profit still upon selling later down the road. We would still make plenty in “sweat equity.” Not ideal, but a better deal then we could probably ever find for a house that so closely meets our needs/desires in a personal home (right now, anyway). We could probably not afford to buy this house in it’s fixed up state for another several years.

So, anyway - I am more at peace about it, because I know if they want much more than that, it probably wouldn’t be feasible for us.

For those who may be thinking I have a problem with attachment to properties, let me assure you that this house is the exception. Any other, I probably would have been content to leave the first low offer and wait to see what happens.

I took Sandy’s advice today and drove neighborhoods(the ones I want to LIVE in)looking for distressed properties, and writing them down (actually, most of them weren’t very distressed, just far from their potential). Thought maybe it would prove that there are other homes out there I’d like to live in, that at any time could manifest into a great deal. Kinda helped… although none seemed as good as the one on the table. :frowning:

Now I will determine what to do with my lengthy list. Any suggestions? There’s too many to have them all looked up for me at the courthouse. Maybe I could just send form letters to all of the addresses.

Well, I’ll lay off with my lengthy posts now… at least until I have my next update! :slight_smile:

Thanks again for all of the advice and insight! All of you had excellent methods and ideas that, depending on the exact situation, would be the right way to do things. Hopefully, I matched the right action to this particular situation. :slight_smile:



Re: Would this be inappropriate? - Posted by Krista(WA)

Posted by Krista(WA) on March 02, 1999 at 11:22:43:

Thanks for your comments so far! They are very helpful. I asked the agent specifically if negotiations with the first offer would be completed before they even looked at the next offer and she said yes. Now I don’t know what to think! It took a lot of willpower to still make the offer at our starting point because I suspected the whole “competition” scenario, and didn’t want to be victim to it (been there, done that on our 1st project!)

The problem here is that I fear the agent may be working against us. The offer has to be either an investor who looked up the property like me, or a friend of the realtor who was called and told about it, and just happened to get their bid in right before ours. OR, it could even be the realtor herself (she really made an issue of making sure I filled it our w/ her partner’s name). OR, it could not exist, I suppose. It probably does. The realtor was stalling me until she actually looked at our offer, and then she was willing to let me sit in her office and write it up while she went to a meeting. Was that because she thought it was low, and not a threat to the other? Because it wasn’t low and might get accepted instead of the other one that may involve another agent? Or just because she realized I knew how to fill out a contract? These are just some of the thoughts going through my head in trying to second guess what is going on here. This system bugs. There is no accountability. No way to know if the agents are being truthful or ethical. At the risk of being a whiner - it’s not fair! :slight_smile:

As you can see, I’ve already broken the number one REI rule. I’m emotionally attached to this property. :frowning:

But I don’t want it if I can’t get it cheap enough to work in the fixup financing (at least most of it) or refi and pull it out. The real problem is since there isn’t a listing price, or even a hint of one… I have no idea if the bank and realtor consider this a low ball offer or not! The realtor could have been containing her excitement that someone would offer so much, for all I know. I seriously doubt it (I have more confidence in my estimates than that), but who knows? She did say that this property did have a pending sale already, and the buyer backed out. Then the bank switched managing companies, and they’ve had to start all over with appraisals, BPOs, etc. I would love to know what that contract was for! All I do know is that the bank paid 89k at auction, 141k was owed, and the first realtor who walked me through said “maybe, if it was all fixed up it could fit in the 140 range, but of course it will go for much less like this.” What I don’t know is what someone else (ie: the realtor, the bank…) may think the repairs would cost to get it to that 140k. There are so many options for what you could do to this property.

I’m rambling - Here’s my question: Would it be inappropriate to call the REO manager (or clerk) at the management company to see how they do handle multiple offers, and get a feel for when they will consider them? At the very least, this would make absolute certain that they know my offer exists… on the off chance that the agent may sit on it. Would this just make everyone mad at me? Or could I do it in a way that is very innocent and curious. After all, I talked to that lady before the agent, and she seemed friendly… “I just want to get a feel for how this is done since the realtor didn’t seem to have much info yet.” I’m usually faulted for a lack of agressiveness - would this be inappropriate?

I should call today if I’m going to change my offer… your additional insight is appreciated!



Re: Need more advice…Update on “my” REO… yet another obstacle! - Posted by SCook85

Posted by SCook85 on March 02, 1999 at 24:05:11:

Jim’s advice is very good. The bank is not going to put your offer on the back burner while they review the other offer. From my experiences unless the bank was going to list at or around your offers neither one of you will get the property. The bank will think that they can get more and hold out for more. I usually stick to my guns. You are in a situation where you want the property for yourself so the rules change a little bit. If this were strictly as an investment you are getting to emotional and may offer more than what you should. But since you want it for yourself it is OK to pay more. Also most other investors who get offers in early low ball and try to pick properties up cheap. They get there feelers out to see where the bank is. I do this all the time and it is like a game. I just got an offer accepted from a bank today, listen to how this took place.

7 months ago this property (3BR 1BA cape cod detached garage) in a good neighborhood but bad location (next to a junkyard) came on the market at $69,000. The home needed work and had comps of about $80,000. I offered $45,000. The bank turned my offer down. Two months later the bank reduced there price to $59,900. I offered $42,000. Again they turned my offer down. About another month later they reduced the price of the home to $54,900. I offered $40,000 and they turned it down. Then they reduced the price to $49,900. I gave up and didn’t make antoher offer. Then I saw in the listing that they said the bank would entertain all offers (this was last week). I then offered $29,000. The bank asked for a prequalification letter before they would consider my offer. We faxed it over and they called back immediately to say they would take it. They didn’t even counter. So the same home I would have paid $45,000 for 7 months ago I got for $29,000 today. The point I’m trying to make is that banks do not make any sense when it comes to dealing with there REO’s. They always think they have a goldmine in the begining and drag there feet. You could still be months away from getting this offer accepted.

Take your time, make sure you keep your offers in on the home, and offer what works for you. Nothing more. Don’t get tied up in there games of bidding wars.



Re: Need more advice… - Posted by JPiper

Posted by JPiper on March 01, 1999 at 19:31:14:

I wouldn’t worry about being “second position” with your offer. The lender is going to see both offers and make their decision accordingly. They don’t look at only one offer and decide. They’ll look at these offers, and any others that come in the interim.

The question though that arises is how the lender would handle multiple offers. Will they pick the offer they prefer, and then counteroffer that offer while holding the other offers at bay? Or will they do what I would do?.which is to verbally counteroffer all offers after informing them all that there are multiple offers? I would then give until a certain time and date for each of these buyers to respond with an acceptance or additional counteroffer. At this point I would pick the best counteroffer, or write up the deal that was accepted. The point is, how will the lender do it??

Chances are the agent doesn’t know how it will be done. But what this situation accomplishes for the lender is that YOU know of the existence of another offer. YOU know that a period will go by where other offers could conceivably materialize. Not an ideal situation at all, because what it forces you to do is make your offer near or at your best offer. If I were in your shoes, I would make my best offer, or something close to it. This may be your only chance. It’s hard to be cute in a competitive situation. Having said this, understand that I’m not suggesting that you overbid what you feel the property is worth to you. But at the same time I would believe that I better make my best offer because when the bank evaluates them, if you’re low, you may get no more opportunities. You’re going to have to sharpen your pencil.

Will the agent inform anyone else of the nature of your offer other than the lender? They shouldn’t. Agents are typically cautious here?.but sometimes what they do is to give “guidance”. Just today I had an agent tell me that a property I expressed an interest in has an offer in process?.that I still have time to make an offer?.but that the offer he had in his possession is “strong” and that therefore my offer should be “strong” as well if I hope to buy the property. Is this agent telling the truth? Or is the agent trying to force a higher offer? Frankly, I don’t know, or care. I’ll make whatever offer is appropriate for the property given my circumstances?..probably none since I don’t like competitive situations anyway.

So my advice would be to reevaluate your offer. Make what you consider is close to your best offer based on your circumstances and what you plan to do with the property. If you decision is to raise your offer, call the agent back and modify the offer. I would also provide the agent with enough information to allow the lender to determine that you not only have a good offer, but that you can perform as well. In a close situation this may be what tips the scales.

Good luck.



Re: Need more advice…Update on “my” REO… - Posted by Sandy FL

Posted by Sandy FL on March 01, 1999 at 19:11:16:

Krista, relax a little. You have put alot of time, thought and energy into looking up this REO and I understand your stress. Trying to get information/make offers on bank owned property can be a very trying and
frustrating experience. I once had been calling and
offerring here on a FDIC-owned property here for months
before they even told me they needed to have a “broker
open house” to assess its value and come up with an
asking price. They then me told that offers would not
be considered until they set a price. I have heard that
alot,… kind of like saying we really want to sell it,
but please jump through these here hoops before you
help us solve our problem. They will tell you that
there are several other pending offers which are
senior/larger/earlier/less contingencies than yours.

And who knows if any of it is true? Maybe there is an
offer that was presented before yours, maybe there
isn’t. Maybe its a friend of the agent (the one who
wasn’t returning your calls) that made the other
offer). Maybe she wants to see what your most serious
and high offer will be. Maybe the woman is getting a
divorce and feels crummy,… who knows! (Bad hair day??)

Krista, it is your job to ignore all that. Continue to
be serious and persistent, and construct your offer so
that IT WORKS FOR YOU. (And don’t make your best offer
first) That is all you can do, and then be at peace. If
you get it, fabulous! You got it at a price which works
for you. If you don’t get it, or they counter at a
crazy price that would make it very difficult for you
to make a profit, then stand your ground. You can only
do your best and then “be unattached to the outcome” as
Jim Piper would say. Remember to make your money going
into the deal, and that the BANK is the one with the

Don’t let this one deal make you crazy. It sounds like to me that they are stalling you to see who else might offer on the property, or to see how high you will go. Your assignment is to NOW GO look up and make offers on
five more REO’s to keep your perspective! Remember it’s
a big game! Enjoy…

:slight_smile: Trying to be helpful- I hope you get it!

Sandy FL


Re: Would this be inappropriate? - Posted by JPiper

Posted by JPiper on March 02, 1999 at 14:54:04:

It seems my original post was replaced by another, so here it is again:


Here’s one guarantee I will make you. ALL offers for this property will be presented?.it’s the law. Now imagine this?.you’re the lender. You have a property for sale. Two offers arrive in separate envelopes. One is labeled “offer #1”?.the other “offer #2”. You as the lender say?OK, we can’t look at offer #2 yet, so lets look at offer #1, work on it, see where it goes, and lay this “offer #2” over here in the corner until we’re done. Not going to happen Krista. All offers will be presented and looked at. How they will respond at that point is up in the air, but chances are they will counteroffer what they feel is the best offer. If that negotiation is unsuccessful, they may later counteroffer the other offer.

All the rest of this is your mind running rampant with all the different possibilities of who said what, who made what offer, etc etc. It’s all irrelevant. You’re in a competitive situation?.like it or not. There are 2 offers. The other offer may be from an investor who is a friend of the agent. Who knows? Maybe she calls him on every listing of this type because she knows he’s “real” and he’ll make a quick offer. Nothing devious or illegal about that is there? She’s doing her job.

In my view, you make what you feel is your best offer?..then relax. See what happens. But in a competitive situation, don’t count on having the luxury of counteroffers and recounteroffers. If your offer is not the best of the 2, the bank may not respond at all to your offer. Now since you don’t know what the other offer is, the only thing you have within your control is your own offer. Make the offer that you are comfortable with?but again, don’t count on being able to jockey back and forth with the bank.

Personally, I wouldn’t call the lender again. There isn’t much to accomplish with such a call?.other than to illustrate how motivated and attached you are. Whether they handle the process one way versus another shouldn’t be influencing how you make your offer?.other than what you already know. And that is that there is another offer, and that if you want the property it’s not a time to be cute with it.

Make the offer that you feel comfortable with?.and then let it go.



Re: Would this be inappropriate? - Posted by Perry K. Harris

Posted by Perry K. Harris on March 02, 1999 at 12:46:07:

The approach I would take is to get an offer into the hands of the person who is going to make the decision on whether to accept your offer or not.

This is where the mind set of “there are no rules” comes into play. Let me first say that irrespective of how you buy the RE, the commision will be paid. So…I don’t care about what the realtor thinks of my tactics, I care about what I can do to get the deal.

Especially, if I suspect the realtor is making a play, and it seems like that might be happening here. This is akin to going to an attorney of one’s former spouse in a divorce case, and expecting your spouse’s attorney to win you a favorable judgement against your spouse.

I would write an offer up, that I can live with, and I would mail it certified, to the REO employee of the entity that holds title to the property.

This isn’t any different than if the REO officer had tipped off a buddy about the property, and the buddy came on down to the bank and dropped off a written offer.

The realtor would eventually handle the offer, and would still get the commision.

What you are doing, is getting your offer, in front of the REO officer, and not being entirely at the whim of the sales agent, and the agent’s motives, to hinder your offer, if that is in fact the case.

I would include a letter with the offer, that would indicate that I am a RE investor, engaged in buying wholesale properties for my RE portfolio, and I’m not in the business of losing money, therefore I have stuctured my offer to fit my parameters.

I am not interested in longshots, and having my money tied up for extended periods of time.

I have taken the time to submit a credible offer to your firm and would appreciate consideration.

Think about this : I wanted to buy a VA repo in a city I was not entirely familiar with. The RE was in a marginal area, but the immediate neighborhood had an obvious air of “pride of ownership”.

I paid for an appraisal of $275. My plan was to rehab the RE for $10K. Purchase price was $25K, and value was projected to be $55K. After figuring fix up, the future value was projected to $38K. No thank you.

My point is I hired expert help and it saved me from a tremendous heartache later.

This is just a what if…What if you hired an expert ? I’m thinking about an attorney that specializes in RE foreclosures / REOS. What are they charging, $50 an hour ? One hour counsel, and the intro may be free, then an hour at the realtors, and if the bank is out of state, an attorney recommended by your local attorney can go to the bank in San Diego. So…you are out 3-4 hours @ $50 per. That’s less than my appraisal fee.

I believe this would filter out the crap that it seems to me you are having to wade through. Just a thought on a little different perspective. How much money are you actually going to make on the deal ? Is it worth it to hire an attorney ? Is it neccessary ? You are basically in a game of hardball, and YOU get to make up YOUR rules for YOU, just like THEY get to make up THEIR rules for THEM. Hey…throw THEM a curve ball, then a fastball, then a slider, then a change up, then a knuckle ball, and don’t forget the old spit ball. And in the majors, sometimes they throw a beanball.

Never let them see you sweat. Approach this deal like it’s your 20th one today, and you could really care less if you get it. Because you know what ? You might not get it. But if you do…PAY DIRT ! Because YOU wrote an incredible offer, stuctured where you profit, on your terms. Thanks, Perry,Ill…


Re: Need more advice…Update on “my” REO… yet another obstacle! - Posted by J. Simcoe

Posted by J. Simcoe on March 02, 1999 at 16:10:56:

REO’s are tough unless you can get to the banker before it goes to a real estate broker. If it is REALLY a good deal, the broker will probably buy it. A deals & B deals. A deal is when a broker buys it or gives it to one of his best investor clients - B deal is when the broker or his friend resells it.
Pick two or three banks and watch the paper, go to court house steps auctions and give them your card. Go to the bank and meet the REO manager. Stop by often and ask if they have anything that is upcomming. Call occassionally. After a few months of this it will start to pay off. Never ask them to finance one of their own REO’s for you.
After ten years in Real Estate working REOs in south Florida my most prized possession was my list of private line phone numbers for REO managers. After we closed several they would call or come by to see me. Usually around lunch time! There are so many out there trying to steal a foreclosure that bankers usually don’t pay much attention to you for a while. Hang in there and be persistant. Don’t get discouraged over one deal.