All Forum Posts by: Joe DiGirolamo

@Joe Splitrock - Loyalty is very important and it's nice to hear someone mention it when money is involved! I too think loyalty is so important. Here is my opinion on this.

If you are buying REO's, they probably do not carry a hefty price tag. I work for about 7 different asset management companies/banks. Almost all of the listings contracts for properties under $50k are a flat commission of $2500.The bank takes $500 and the $2000 get split between the agents. If the sale price is over $50k then the commission is 6% BUT the bank takes 1% referral and the agents split the remaining 5%. I have even seen the bank offer more on the selling (buyer) side.

If you're flipping, you know that you make your money on the buy. First off, if you can't get the deal then nobody wins. If you are buying something below $50k, the agent makes the same no matter what the sold price is. The agent is supposed to get as much as possible for the bank, yet they make the same commission. As the listing agents buyer, do you think they might be more inclined to get you a better price, especially if you are a nice loyal guy? 

My point is that if this strategy will get you the deal or a better price on the deal. Then relist the property for retail sale with the realtor you are signed up with. You are still doing business with him! Keep in mind you could use this for your REO acquisitions only. I don't think it's unfair or not being loyal. It's just business. Maybe throw your guy some bonus cash! By the time the commission is split with his broker he is probably ends up making $700-1000. I'm sure the agent who has both sides could get your sale price a low enough to offset the cost of the bonus.

happy investing!

@Jamaal Thomas - I would be mindful of your current listings and their expiration dates if you plan on changing brokers. The listings you have belong to the broker and not you. If the broker wants to be nice they can release the seller from the contract. Then you can relist with your new broker. Your current broker has the right to keep those listings and continue to market them. The only way you can really fight back is to have your seller's be uncooperative. That may be difficult though, as it hinders them from their goal of selling the property.

I have seen savvy agents strategically plan their exit. They figure out when the bulk of their listings expire. That is the time they will chose to make their move. Any new listings that are signed will have expiration dates close to when they plan to leave. Then they leave and not too long after the listings begin to expire. As they expire they will relist. 

Just a tip. Make copies of your listing contracts for reference and copy any important files because they to are the property of the brokerage.

@Joe Splitrock - I find that agents answer to be a bit odd "the bank, just wants to get what they have into it." Actually sounds like total BS to me! There are other costs but like @Patrick L. said they are irrelevant. The value of the property is all that matters. Banks are in the business of loaning money not selling property. I would say it is uncommon for them to try and make money off a foreclosure. A large portion of foreclosures are failed short sales (the bank taking a loss) In that case, the loan amount exceeds the value of the home and that's before all the appliances are ripped out or any other damage is done. Banks want it off the books, minimising liability; that's why they sell. Many REO's are not owned by the original lender, the loan may have been sold several times. Many times bad debt is packaged up and sold off in bulk for pennies on the dollar to companies who specialize in buying non-performing loans, foreclosing and then selling the property.

As for your offer, here is what I would do. First and foremost, I would let the listing agent represent me as the buyer, even though I'm full time agent. Typically the banks give more commission to the buyer's agent than the listing agent. It is in the agents' best interest to sell to his own buyer. You have a better shot of getting the deal if the agent knows he has both sides. Basically, when doing a deal I focus on the profit not the commission. You will also be more likely to have deals sent your way in the future. I would also put the offer in with no inspection and as little contingencies as possible. Buyer to pay for all municipal certs and inspection (typically already mentioned in the listing). You can always do the inspection anyway and still cancel the contract for another reason. Cash and a quick close is a HUGE factor to likely land you the deal. EVEN IF there is another buyer offering more money, with a mortgage contingency. Asset managers want that property off the books ASAP (I have heard this is a factor in performance reviews and bonuses). One other thing you can do to both save money and possibly make your offer stronger is use the title company of the sellers' choice. Banks/REO asset management companies will typically pick up a portion of the title charge on the buyers side if you use their company.

Hope this is helpful!

Happy Investing!

@Terrance Merck first let me say congrats on a great lead! I think the guys above did a great job with questions to ask. I usually also ask: 

Why are selling at this time? What are you going to do with the property if it does not sell? Are you current on your payments (if they aren't owned free and clear)? Do you have a number that you are looking for? How did you establish this price? Have you talked to anyone else? Have you had any offers?

A bit off topic but I just thought I'd mention, 6 properties is a lot of information to record and digest. Do you use any kind of a lead sheet? I use a standard form when I talk to any seller. It helps me to keep the dialogue going in a productive manner and makes sure I gather the important info I need. I would want a sheet on each property. This should give you the basics so you can comp the properties out and have a general idea of value. If it were me, when I went to see the properties I would have that original sheet, a note pad and a camera. I would also be filling out my other favorite standard form, the repair estimator. No matter what you strategy is in this deal, you have to know the value, the cost of repairs and be able to remember which property is which! Who knows you may want to wholesale 2 of them, flip 2 and hold 1 to rent and make the other one your primary residence! In all seriousness, this is an amazing opportunity! I'd want to make sure my seller is confident in my ability. I think it is essential to be as prepared and professional as possible. 

Happy Investing!!

@Account Closed - Yes, having my license is a huge help. I don't know how investors function without it. It makes you a lot less dependant on others. As for where is the best place to be for international RE, I'm not sure. I would start a new thread and ask the community. I'm sure someone on here has the answer! 

Happy Investing!!

@Account Closed I recall being told that foreigners could not purchase property in China. Has this come up at all? Just curious. Very interesting topic though. I don't see a lot about foreign investment on the forums.

Check with the county first, see if it still on the list or if the bank took it back. If it's a small local bank you could try to talk to someone. I have yet to hear of anyone pulling that off though. The other possibility is the bank may have sold the bad debt but the change in ownership hasn't been recorded yet. Do you know any REO agents in your area? Check with the ones who do the most business. They may have received notification to list the property. When I am contacted about a new listing, sometimes it is 6 or 8 months before it actually gets a sign put on it and is downloaded to the MLS. I currently have 2 properties with title issues. The original notification was sent me me well over a year ago and it still is not technically listed.

Happy Investing!

Many beginning investors ask this question. I think if you are getting involved in REI, you should have a license. It gives you MLS access which is essential to finding value. It also gives you access to properties, without needing to call and wait for a realtor. People will tell you that you don't have to be licensed to be successful. They are correct, you don't have to be. There are many more positives than negatives though. To answer your question about limiting you. The only thing you have to do is always disclose you are licensed realtor in all your transactions.

Good luck in RE school!!

@Julian Dozortcev - I am an REO agent in NJ. I'm far away from you but if you have any general REO questions I'm happy to help.

@Zoe McFadden Check out http://pintzukbrownmanagement.com/ I work with them when I'm doing anything in Philly. They can probably help.

Happy investing!!