All Forum Posts by: James W.

 Understood. Can anyone answer then whats the whole big deal about REOs?Why talk about it at all - theres dedicated forum on REOs in BP - why?

https://www.biggerpockets.com/forums/16-reos

What am I missing?

Anyone??

Understood. So whats this whole REO investment thing and a whole forum dedicated to it? Why buy or look at REOs?

 Newbie here - will the Official Public Records contain all liens recorded so far? Of any kind? Any exceptions? We can always get Title Insurance after the purchase, right?

 Please see question above, thanks.

Understood.

But then my question is - what is this whole REO investment thing about? BP itself has dedicated sections to REO's - with the rule of thumb of never buying above 30% of list.

How does REO investment work?

What a great response!

After looking at the REO situation, it seems the Auctions - could be more realistic chance at getting something reasonably under the market.

But then in Auctions, its a blind bet - may land up catching a lot of junk. And, that they are all cash.

I am trying to stick to condos for the first problem - they seem to have less problems than SF houses, at the cost of HoA. And cash only itself has limitation.

Thank you!

 Thanks Ron!

1 - So I do Title Search before going to Auction that is. For going to a few - it would be quite a spend of title check fees. Any recommendations for free or low cost but dependable title search online? Or is the only way the hard way - go to the county clerk?

4 - These have to be certified checks, correct? Or can I take personal checks (sorry). Its great to know they return the excess - so probably best to make a single check of 15K above what my highest bid is going to be.

Btw- do you also have experience buying REO's below market and reselling them at market? My little experience so far has been, that 10-12% below market value just evaporates away as my cost. Then if i have to make 10% - i need to buy 20-25% below market price. And when i say that to the lsting agent - they dont want to talk no more! they wont budge. So how does that ever work for anyone?

An example is a REO condo listed at 250K. My costs of buy closing, sell closing, 5% commission to resell at 250 again, 3 months holding period tax and condo fees - come to 25K. Thats 10% - that just went away as costs. And then if I want to make 10% - I need to offer 200K. But the agent wont talk to me now. If make that call for 5 condos - the whole county agents will probably blacklist me.

Hi Ron,

I saw aboveyou mentioned inspection. How does one go about inspecting the auctioning property.

Do i have the steps right?

1. Before bid open they give a disclosure of all senior and junior liens, occupancy status. Is this correct?

2. They announce the credit bid.

3. Buyers make bids. Highest bid wins.

4. How many and amount of checks are required? Auctions dont say it anywhere.

5. Title Search, Inspection - I assume one has to do this before.

6. How to go about inspection on a property you cannot visit?

Thanks.

Hi Gys,

I have a day job and hoping to do some Real Estate investment. I dont have the time for reabbing, or fixing/ selling.

So I am hoping to buy REOs below market, and reselling at market to make the difference.

I am in Hudson county in NJ, lots of high-rise condos along the waterfront here. I only pick condos, because they generally dont have exterior issues like SF homes, and dont have a tonne of other hassles like sewer.

I shortlisted a few REO condos. Did the math. I figured 10-15% below market price just breaks me even - (see cost breakdown below athe bottom of the post). And then if i want to make 10% - I have to offer total 20-25% below market/ asking.

I spoke to the listing agents over the phone. My experience has been very bad. The agent tells me

outright that he wont represent me because its 20% below market.

It seems to me that the listing agent themselves - are an obstruction to this whole REO investment for resale. And wont let you do it.

I even offered him to relist with him - but he wont budge. Now, this is not just with one agent, I tried two others. They are equally or less hesitant.

To make matters worse, the banks keep giving properties to the preferred agents in this region - so its not like I can piss off one and move to another.

So overall - it seems - offering 20% below market/ list is not easy if not impossible. And the listing agents themselves are a roadblock in this process.

Two questions:

1 - Has anyone had a similar experience? Is there a way out?

2 - Assuming I have a brokerage license, can I submit the offer myself to the bank? Or do Banks only take offer via their listing agent?

3 - Will I need a Agent or Broker license, to be able to submit the offers?

Looking forward to some responses. My math for 20% below is below.

Sample Breakdown:

Condo list - 250K

Market price - 250K

Buying Closing Cost - 5000

Selling Closing Cost - 5000

Selling Commission - 6% of 250 = 15,000

Management Fee - 3 months HOA deposit - 3 x 450 = 1350

Three months vacancy period HOA - 3 x 450 = 1350

Three months vacancy period Tax - 3 x 500  = 1500

Total Cost = 30K.  

Breakeven Price - 250-30 = 220K.

That's 11%of List Price.

If I want to make 10% - 25K

Offer Price = 220-25=195, say 200K

That's 20% below asking.