Posted by Steve(NY) on March 13, 2000 at 18:50:49:
Hello all,
I’ve just had my 2nd offer on a bank REO rejected and would like an opinion on what to do next. The house is a 3bd/1ba in run down condition in a nice section of town. The bank’s asking 35K. As is condition it’s not worth 1/2 of that. FMV if rehab’d would be 40 - 45K. My offer has been 15K with 1K earnst $ and close within 15 days all cash no mortgage. The first counter by the bank was 35K. The second is 32K. They are still way off. Any suggestions?
Posted by Steve(NY) on March 14, 2000 at 17:28:09:
Thanks for all of the helpful advise! I’m going to do as some have suggested and resubmitt my offer in 1 month. I just find it hard to believe that this bank doen’t realize they can cut there losses right now with a buyer that has cash in hand! Oh well; on to the next one.
Re: Next step on bank REO… - Posted by Ben in Ohio
Posted by Ben in Ohio on March 14, 2000 at 08:11:46:
You would raise a ton of credibility with the bank if you were to suggest an appraisal, of the banks choosing. Most likely, they have ordered one anyway. They may be toying with you in the meantime, if you bite at the higher price they succeed.
They know the games being played out here. For each property that goes bad someone or some dept has to explain the rationale for unloading to you before the sheriffs sale.
I am workin on a deal now. My offer to the bank was about $30K on a $43K principal balance plus fees. They suggested an appraisal, it came in at $29K. It didn’t make sense to them because the loan was only 18 mos. old. The question is how did the property go south so quickly? SO, they ordered another appraisal. This one came in at $19K! My offer was a hoot! Nearly cost me thousands of dollars. I revised my bid to $22k. The rep from the bank called me Friday and asked if I could pick up the back taxes of $1500. I agreed. Now, the offer goes to HQ (whoever, or whatever makes the ultimate decision) and I should know in a week or so.
Now, if the deal goes through my plan is to perform flawlessly. And to let them know I can close quickly on ANY of their bad deals. I believe I can do this not because I have a ton of cash lying around, but I will utilize the resources of my local RE investor clubs and/or contacts. If I can show the banks a solution to their problem its a WIN WIN.
Don’t forget, you don’t need EVERY deal, and if your REO’s aren’t getting there, look to other sellers.
Phil mentioned lowering your offer… we did that, and ultimately the bank came back and took it! However, by that time the place had been stripped of every piece of copper wire and we had to lower our offer again.
On the other hand, we low balled a triplex and got it. Who knows? Depends on what they have to move quickly and why.
Just don’t ever fall in love with a deal (I did that early on, so I know how easy it can be.)
They are asking full market price here too, no matter how much rehab they will take ! I understand that the bank review’s the property every 30 days (or so) and reduces the price if it doesn’t sell. Usually only 10 percent per month. At least that is what I am being told around here. So, it may take 5 or 6 months to come down to a realistic price. In the mean time, some do-do could come and make them a high offer and the bank wins !
Steve,
You are dealing with an unmotivated seller. If they are not motivated you can’t do anything except wait. Time makes banks more motivated. The key is to keep your offers out there so that when they become motivated and are willing to accept less at least you will be in the running. I have frequently bought REO’s 6 months after I made my original offer. Be patient, make more offers and find one who is ready to deal now- this one may come around soon.
