REO Asset Manager Wants to Know Why I need so many days to close?

Question

Hello fellow BP members,

I've just negotiated a decent price on a property that I plan to wholesale, however, the asset manager wants me to close in 1 &1/2 weeks and I don't feel comfortable setting a closing date this soon.

I have countered with a closing date at least 21 days from the date that we sign the contract.  By then I should know if I can find an end buyer or not.

I do not want to buy if I don't have an end buyer lined up.

The asset manager wants to know why I need at least 21 days to close if it's a cash deal???  Any questions or advice on how you would respond?

Mike Morrison · Answer

The Seller still has to still update the title commitment. That will take 2-4 weeks. A reo seller will have all kinds of addendums & disclosures the buyer MUST sign.
Watch the AM these A-h$%^& will make you jump thru hoops and then take their time on their side of the deal.
Also, read the title commitment-it will scare you how much is not covered on an reo title policy. Just MHO. Also, Anson is correct, it's bonus time...

Tim G. · Answer

Take a look at the contract. In California there are many ways to drag out the sale per the CAR (California Association of Realtors) form.

Here you could make it a 10 day inspection contingency and stretch it beyond that.

If you haven't yet, study and know your states residential purchase agreement form used by agents. There could be some nuggets in there that could help you out.

Jake Kucheck · Answer

I would have the same question.

You don't need 21 days to close if you have cash, because it doesn't take 21 days to do an inspection (or appraisal if you're getting one).  Since you don't actually have cash though, but instead purported yourself to have cash when you didn't, the asset manager is seeing through this and trying to get to the bottom line of your offer.  If they sense that you are trying to wholesale it (which you are), they will likely want to go with a different offer (as they should).

Anson Young · Answer

Just sounds like an AM trying to meet their monthly numbers, so they can have their ice cream party or whatever they get for closing X amount of deals.  Usually its title and deed package that holds up closing a cash deal, 7-9 days is pretty quick, even for cash (at least in CO and AZ).
What was the accepted closing date, or is that still in negotiation (ie. no bank addendums/not under contract)?

Dion DePaoli · Answer

So it could be the AM is shooting for month end numbers and asking you, "well if its cash, let's just close".  If you push through on your 21 day mark, I would ask you for a step escrow and short due diligence time.

Do you have capital to lockup the deal?  If you do then question for you, is how high is your tolerance for risk into the deal?  How much confidence do you have in your number?  How did you get to your number without an investor somewhere?

Sounds like if you want out before you get exposure you don't want, you will have to lockup your back end prior to the expiration of the due diligence period.

The good news is you know where he is a seller.  If your not so sure of yourself, then don't put it into contract until you find someone.

Hope it turns out well for you.  Keep us posted.

Travis Sperr · Answer

If it is a strong deal you shouldn’t have any issues finding a buyer.  As a hard money lender we receive calls from wholesalers fairly often. If I were you, I would get in touch with a hard money lender and tell them about your deal.  There is often a focus on building your “list” as a wholesaler, we have a long list of prequaled clients that has allowed us to get a deal sold in just a couple phone calls.  The lender will be happy to make a loan and you can get paid.

I have seen banks counter with a faster closing date, I have heard from REO agents that the bank wants to get deals closed by the end of the month to eliminate additional costs, etc.  I think that it just comes down to the bank wanting to know how serious of a buyer you are and not wanting to lose any marketing time.

Good Luck.

Manesh Hardeo · Answer

Well, before you get to that point I'd make sure you have at least some buyers together and KNOW what they're looking for.  I see it all the time where wholesalers contract something that's a REO on the market, but guess what....everyone else can see that same deal, so you win some you lose some, but know your numbers and what buyers are expecting.  If you have buyers and you know what they're wanting it's a matter of putting them together if the numbers make sense.