Learn Real Estate Investing – REO Property Offers
Last week was a real busy week for questions and there were a ton of them that I really want to answer…
… but alas, time is not permitting. So I struggled to pick out the one that I thought was most timely and relevant to the majority of my readers and site visitors.
And here it is:
“How do I package an offer for an REO property so that it will have the best chance of being accepted?”
This is an area of much frustration and confusion for many people trying to learn real estate investing. Especially right now as competition for the REOs is really heating up!
Here’s six things you can do to make your offer stand out and get accepted on REO deals:
1) Examine the property history
Have your agent get you the bank’s purchase price on the Trustee’s Deed or Sheriff’s Deed. Compare that price to the price the bank is asking.
Also look at the amount of the loan that was last secured to the home.
Assuming the house is under priced, the bank will accept an offer that is between the original mortgage balance(s) and the foreclosure sale price.
2) Carefully examine the comparables
The list price usually has no bearing on the actual value of the property. In real estate a property is only worth what someone is willing to pay for it. If you have competition on this property, you can be certain others will be offering more than the list price.
To determine what this property is truly worth, you have to examine the last three months of comparables. These must be very, very close comps too.
Look at any pending transactions of comps. Ask your agent to call the listing agents of those pending sales to try to find out the accepted offer price. You may or may not get this to work but it’s worth a shot.
3) Check out the listing agent’s recent sales
The majority of agents that do REOs work for one or two banks. And some of them list REOs exclusively. Because of this, they deal in volume and will usually apply the same pricing principles to all their REO listings.
Have your buyer’s agent to look up the listing agent in MLS and run a search on his or her name for the last 3 to 6 months of listings.
You be able to see in the history of those listings what their list-price to sales-price ratio has been.
If you see a trend in what those listings are selling at – for example: 4% over list price, then you may consider offering 5% above the list price.
4) Submit a verification of funds letter
5) Don’t ask the bank for concessions
Many people with try to get the bank to pay for inspections or repairs. You have to remember that they are already taking a bath on these homes selling them for less than what they were owed.
Which means they take that as a slap in the face and don’t consider you to be a serious buyer.
Occasionally they will pay for repairs, but will never agree to do that at the offer stage.
If you find major problems during an inspection, you should renegotiate after your offer has been accepted.
6) Shorten the inspection period
Again this speaks volumes to your seriousness as a borrower. The faster you can get things done, the more the bank will want to work with you.
There you have it – six surefire things you can do to package the best REO offer possible. One thing I’d like to point out here is that this is a lot of work…
And several of the strategies I laid out are relying on you having a real estate agent to help you. More importantly, this is just one piece of the puzzle too!
You still need to get access to the funding to get the deal done and you need to learn real estate rehabbing and reselling strategies too.
What Resources Do We Have to Help You Learn Real Estate Investing?
That’s why I’ve put together my Find-Fund-Flip System. It will give you all the training, coaching and access to financing that you need to achieve the financial freedom you are looking for through investing in real estate. It really will help you learn real estate investing by teaching you the strategies and systems I used to help me actually make money during the economic downturn we experienced in 2008-12.
We also now offer some amazing real estate investing software that will help you find and value the kinds of properties you need in order to invest, REO properties, tax lien properties and much more. You can even use this software to find comps and contact sellers. Software that is valuable to those learning and seasoned real estate investing professionals.
And unlike other resources you can use to learn real estate investing we can provide funding for your deals- fix and flip rehab projects loans are available o investors of all experience levels. Rental property loans and investment property refinances are all available with varying rates and terms for those with a stronger background and portfolio.