How do I get banks interested?

Question

I have not noticed this forum till now.  I am surprised that anyone is successfully buying REOs because of my experience.  We have looked at hundreds of REO properties here in Michigan.  Our realtor submits a bid on the houses we are interested in, and tells the banks we are able to pay in cash immediately after a good inspection.

The bank takes his bid and we never hear anything again.  There is no counter-offer, no mention about our offer to pay cash-nothing.  I thought these banks want to offload their inventory.  What is up?

Stephani Davis · Answer

Ditto what Scott said- drop the inspection contingency.

If your market is anything like mine (Tampa), there is a TON of competition for REOs right now, so you have to make your offers clean, or they are not going to get accepted.

A lot of the properties here are coming on the market at ridiculously good prices, and there are almost always multiple offers on them.

I got one earlier this month and had to go 10k over list price, offer cash, no contingencies, and close in 7 days.  I also gave both sides of the commission to the listing agent, including the 3k selling agent bonus.  A lot of the agents are dirty around here and will throw your offer in the trash can if you aren't giving them both sides of the commission.  You will probably have better luck if you are making your offers directly to the listing agent.

Good luck,
Steph

Scott M. · Answer

Hey Steve - as further proof if you do it right you will get counters....I made one offer today (one of the 2 this week) and a few min. ago I had a counter.

Now they countered me at full price so I will lower mine couter $1.000 from my original bid - I will not get this one as it is a brand new listing and they won't go any lower for a bit.

If I was WAY to low - they wouldn't have even countered at full price.

Mark Forest · Answer

Thanks for the reply Scott.  Do you at least have the power and water turned on for your inspection?

Scott M. · Answer

Well for one if your asking for an inspection your bid will always lose to mine :)

I do my own inspection before I put a bid on a property (well local ones - I do buy out of state sight unseen - or if I trust the broker in the middle I will do it site unseen local) and there is no need for a formal inspection.

A bank reo is never going to pass an inspection so why get one - or have your inspector or contractor walk through it with you.

2 weeks ago I bid on 5 and I got all 5.  Last week I bid on 5 and I got 1.  This week I have bid on 2 and we will see....

So - you just need to get out there and bid - but I would suggest:

- High EMD - in some cases I do a full price EMD to show how serious I am - I am going to spend it now or in 2 weeks what is the difference?

- No inspections

And maybe there are other things your putting in your agreements that are causing problems like the inspections?

Also depends on what your offering and how long they have been out there.  If it is a new listing at say $100K and your offering $70K your not going to get a counter in most cases - if you offer $90K you will.

if the property has been out there for a few months then yes - you can offer a low ball offer but you need to still be in the ballpark in most cases - even for a few months you couldn't offer $40K on a $100K listing - just isn't going to work.

Scott M. · Answer

I do not - no.

When I first got started I would haI do not - no.

Your buying properties at huge discounts from banks â€“ there is a reason â€“ they need work.

When I first started I would have a contract walk through a home and give me a bid â€“ after a few years I did some averages and found on average I would spend $3,000 on electrical / plumbing.  If a furnace was gone I knew to add $1000 or a hot water heater add $600 etcâ€¦so I just learned by doing and at the end of the year with no contractor going through the house I find I still averaged $3,000 for the type of work I was doing then.

So â€“ you just learn by experience.

Today however there isnâ€™t that much time generally â€“ lots of investors buying and properties go quicker today then they did a few years ago â€“ so you have to have a process and a system that works.

Also â€“ making sure you have padding for things going wrong is helpfulâ€¦

If you want them to turn on gas/electric/water I can guarantee you will lose 95% of your bids â€“ that is a lot of work / time to get that on in most areas and banks will not mess around with it as it just adds to holding costs. 
ve a contractor that I trusted go through the home either with or without me and give me the real deal.

I knew that there was a risk there would be a plumbing issue or an electrical issue