Submitting Offers on Out of State REOs

[Chris Johnson]

Since getting into this biz I've only served as a bird dog. I haven't personally made offers on any properties, but definitely want to start.

I'm looking for some advice regarding out of state REOs in order to expand the search for a good deal. For the short term I'm going to be flipping the REOs I find to other investors. I've received some advice on structuring an LOI or Offer to Purchase contract, cover letters, and online sites to determine FMV/ARV, etc., but need a bit more help. What I'm uncertain about is…

• How do I handle the inspection of the home to make certain it's not a bulldozer special (is this even my responsibility)? How do most investors who deal in out of state markets handle that? I want to be able to exercise the inspection contingency to pull out of the deal if need be.

• What about the termite inspection? Do most investors add that as a contingency or leave it off because the lender typically has it in their contract?

• What is the prevailing preference for getting around the no assignment issue—land trust or option contract language? Does anyone have an example of what they look like?

• Once I find a buyer (in or out of state) what’s the process that puts my buyer in the driver’s seat & gets me paid?

• Just a curiosity item--how do investors who buy in bulk make sure they're getting decent product?

Thanks in advance for the help & don't be bashful about adding any other helpful tips. :D

[Curt Davis]

1. Most REO agents are looking for all cash buyers. You typically do all your due diligence before you make offers.

2.You can not assign bank REO's. The whole land contract/option thing is a myth. When you place an offer on a bank REO you need to submit a few things:
A) Signed offer with name of buyer
B) Earnest Money - Non refundable if offer accepted.
c) Proof of funds showing you actually have the money to close cash.

3. Once you find a buyer you make sure they give you earnest money and show proof of funds and then you make sure they can close the same day you do, its called a double close. You get paid when the deal funds.

Since you are fairly new and considering wanting to buy out of state it will be hard for you to verify all the info on the home unless you have someone in that market who works for you and helps you with the due diligence, sorta like having a bird dog in another city.