All Forum Posts by: Joe DiGirolamo

@Jacob Plocinski when you say "to research leads," what are you referring to? Do you mean searching for available properties (MLS or FSBO), comping (finding the value) properties you are interested or getting leads for sellers who MAY be interested in selling?

Hello David! Congrats on starting your investing education at such a young age! Let's keep this simple. No, it is not a requirement. It is not a requirement to get an RE license nor buy property. What I would say from my experience is this. Go to college! It is good to continue learning and get it out of the way while you are young. IT IS FUN!! It's not only good for education but for social skills as well; connecting with more people and it's a good transition to life on your own. I think the mistake people make with college is spending to much. I went to a very good, very expensive school. I always loved RE and ended up becoming a realtor and investor after trying to do the corporate thing. I could have went to any school to do what I do now. My school loans were far larger than I expected and took a toll on what I was able to do after college. I would say, go to a school that is not going to financially cripple you when you get out. Keep your debt as low as possible and your credit in good shape. Take courses and continue to educate yourself on the areas you like.

Best of luck.  

Do you do business with this realtor regularly? If I'm comping something out for someone who intends to wholesale, I consider it more of a favor. Is she getting any business from you otherwise? Is it on the MLS? If it isn't and you don't do business with her, she might not bother getting back you. I'd think about what is in it for her. She needs to be compensated for her time.

@Harry Metzinger I'm down in Atlantic County so a substantial portion of my work in now REO. You are getting good answers already on this thread but I thought I'd just add a few things. There is typically a "first look" period, which prohibits investors from purchasing the property for the first 20 days it is on the market. I'm almost certain that is how Freddy works. One asset management company I work with will not look at ANY offers for the first 7 days. Other banks and asset management companies may have a shorter period before they will look at offers or none at all.

As @Richard Fields and @Percy N. mentioned, on good deals you may end up with a highest and best scenario. I typically see this happen immediately after listing. You mentioned the property has been on the market for awhile, how long? It is doubtful you will end up with a highest and best if it has been on the market a while. A price reduction is probably the only thing that will stirs up activity. The highest and best situation I usually see goes something like this:

We list a hot property, there a bunch of activity and we get offers almost immediately. Those get submitted and it triggers a highest and best due to the multiple offer scenario; the bank will try to get the most money possible. When that happens a deadline of several days out is given (Ex. 5pm on Friday). If it is a really great buy we typically get more offers on top of the original ones that triggered the highest and best and they are all submitted by the deadline. The seller will then take a few days to decide which offer to take. As @Percy N. mentioned, there can be some influence provided from the asset manager and/or the listing agent. I won't go into detail how here, this post is already long! lol

I will advise you of two things when making an offer on an REO. 1.) Start with a low offer and give yourself plenty of room. It is common to offer and counter several times! The most I can recall is around 7! If the seller counters in a small increment, move your offer up in a small increment. Some banks/asset management companies actually give their asset managers higher reviews based on how many times they counter! 2.) Even know you are an agent, sometimes the best way to get the property is to tell the listing agent they can represent you as the buyer. If it's that good a deal, make your money on the profit not the commission. REO's are typically not expensive property anyway and the commission will be small maybe even flat rate. All of the bank/asset management company's listing agreements I have seen are variable compensation. The buyers side gets a bigger piece of the commission, so most REO agents will attempt to sell it to their own buyer. If the listing agent represents you as the buyer, they will be familiar with negotiating with that bank/company. If you let them know where you want to end up, they may have an opinion on where to start and how to counter. Having that kind of help may make up for the commission you could would have had representing yourself.

I could just talk about REO's forever......

Hope this helpful and best wishes with your deal!

Happy Investing!

-Joe

@Sandy Reddy - I think that is a risky and unwise play. Have you worked with this mortgage broker before or the brokerage before? How were connected with them? The new lending guidelines make getting a sale with a mortgage closed in 30 days very difficult. All of the lenders my brokerage uses to finance residential sales recommend a minimum of 45 days and prefer to see 60 days unless there are some other circumstance. I'm not saying it's impossible but I would find another way since you have a deposit on the line. You could use hard money if you had too. You may be able to find a private lender or someone to JV the deal with you. I think the real question is probably what do you intend to do with the property after purchase. Is it a primary residence, a flip, a buy and hold or something else? You strategy on the purchase should largely depend on you exit strategy.

I would be cautious of a mortgage person making such promises considering you have MUCH more to lose then they do. Talk to a few other brokers, let them know what you want to do. See who you think truly has your best interest in mind, is willing to take the time to help and is straight up. If you want a great, knowledgeable and honest broker PM me and I'll refer you to the group I use.

Best of luck!

-Joe

@Glenn Mayo - @Kimble Price is most likely correct. I would bet the property IS an REO (foreclosure) or on its way to being one. When banks or asset management companies take back a property one of the first things they do is put property preservation in place. Property preservation companies will "secure" the property (board up and lock any kind of access, winterize if necessary, maintain the lawn, tarp a leaking roof etc...) and check it every so often for damage/vandalism.

I would take a look at the sheriff's sale list and see if it is still on there.  The owner may have tried to do a short sale and had to leave the property vacant for whatever reason. The owner would have notified the bank and the bank would have put property preservation in place at that time. If it is still on the sheriff's sale list you can then go bid on it. If it's not on the list, call the clerk and inquire. The list or clerk can tell you who the bank or servicing company is that filed. Keep in mind this may change as bad debt is bought and sold frequently. 

Although, it is unlikely you will be able to just call the bank and say "Hello there good sir, I'd like to buy this house,,," If you know a knowledgeable real estate person in your area, they maybe able to tell you how to find out what agent is most likely to end up with listing. GO DIRECTLY to that agent and let them know you are interested. In the case of REO's having the sellers agent be your agent as the buyer can be quite advantageous ;) Typically banks and asset management companies use the same agents.

I'll follow the topic and see what info you get, see if I can help you along the way!

Best of luck! Happy Investing.

-Joe

@Ricardo S. 

I agree with @Aaron Montague. It is probably best to be debt free, with regard to credit cards. However, before you pay them off I would consult your lender. Your debt to income ratio will have no effect on your interest rate BUT your credit score will make a huge difference. The lender I work with most is a credit expert and they always advise the borrower what to do with their credit to get the score as high as possible, thus the lowest rate. This doesn't just apply to people with bad credit who need repair to qualify for a particular loan product. It may not benefit you (your credit score) to pay all of these off at one time. Showing a tradeline that is active and being paid on is a good thing in the credit reporting world. You did not disclose what kind of saving you have, which is fine for privacy reasons but I would not exhaust ALL my cash reserves to pay off the cards. Partial payment of the total and then a balance transfer to consolidate (one payment and a lower rate) may be an option. This is what a lender who is an expert in credit would be able to help you with to give you options. Since you plan on changing to conventional 1 year later, choose a lender; let them know your plan from the beginning so they can advise accordingly and do both for you.

Just for my own satisfaction I consulted my credit expert friend. This is what he said about your particular scenario: Since you plan to refinance in a year (you are eligible to do so earlier than that), you should not take a seller credit. You should take a lender credit instead. A seller credit increases the sale price, increasing the amount of the loan with it. A lender credit does not increase the sale price, the loan is for the true purchase price. With a lender credit you will pay a higher rate initially, thus a slightly higher monthly payment. This higher rate/payment only lasts until you refi out. When you refinance, the amount of the refinance will be less because the loan amount did not have the seller credit added to it. This strategy works well with FHA loans. FHA is able to give more in money in lender credits per point than conventional lenders

Hope all  of that makes sense.  

It sounds like you have a goal, a plan and are on the right track! Keep up the good work.

If you want the contact info of my lender please PM me. 

I wish you success in all your investing!

Shana,

Yes, an agent providing the contract is normal. Typically, agents will use whatever contract their broker directs them to use. It could be one that was specifically designed/written for the brokerage; franchises as well as independent RE brokerages. Any contract CAN be used, BUT should be looked at by an attorney. Myself, as an agent, would be very wary of representing someone in purchase using a contract they designed without knowing it was created by an attorney.

You mentioned BP people using their own contracts. Many investors are purchasing property directly from sellers, especially when wholesaling. In this case, it is easier to have your own contract with all your own language and out clauses. I would think that most investors who use realtors to represent them in the purchase of properties use their broker's contract. That being said and as you mentioned, changes can be made. 

You are protected by the attorney review period as @Gilbert Ross Jr stated. Just to clarify, attorney review is 3 days, NOT 72 hrs. The day the contract is signed is the 0 day. Attorney review begins the next day (day 1). When you count days in attorney review, you do not count weekends or legal holidays and attorney review can be extended if agreed to by both parties. Since weekends and holidays are not included the period can last far longer than 72 hours.

My broker does not allow agents to keep deposits. We believe we are in the business of closing deals not taking peoples money. We get paid when deals close. Your agent may have put the deposit clause in because he/she knows you are trying to wholesale from MLS or they are just trying to get over on you. I assume the agent you are dealing with is the listing agent? In a default on the non-refundable portion deposit, the money goes to the seller. Then according to the listing agreement, the seller may owe the broker/agent a portion of the forfeited deposit. That is the only way I have ever seen it but perhaps it is done differently in other areas and I'm not aware.

I would not sign the contract until it is to your satisfaction. If you sign it and it gets submitted, ALL changes must be initialed by both parties in order to have a full executed contract. This creates too much back and forth and messy document.  I would advise you to strike (take out) anything you don't want, like the assignment clause and add the additional provisions, your outs, BEFORE signing.

I would be very careful with whomever you are dealing with...

Hope this helps!!

-Joe

Hi @Shibu Thomas

There are many garden level apartments in my area, They have low ceilings and sound similar to what you are describing. I sold a property last year that required the owner to get a certificate of nonconformity to be a legal two family. The client retained the services of a well known attorney who has a great record of winning these types of cases. I attended the hearing/meeting.Basically, he was able to prove that the property was a two family/duplex since the 1950's. He used old receipts and even letters that mentioned it! The laws had changed at some point many years ago but because they were able to prove the property had always been a two family, it was grandfathered. 

The first thing I would do is call your local code enforcement office/building department. Ask them to give you the current requirements. Next, I would find out who the attorney(s) is in your area that is known for regularly dealing with the Zoning Board. I would call them and find out if they think you have a reasonable chance of being approved. The approval would be a big plus. Then you are legal and it can increase the value as well as the salability of your property.

All the best in your investing endeavors! 

@Mina G. - Most people I know who buy at auction go to the bank and get checks in $10k increments. Then they get a few smaller checks like $5k and then $5k in actual cash. It makes it easier to put down exactly 20%.

As for the mortgage question. If you are talking about taking an equity line of credit on your own home to get cash to complete the auction purchase you can do that. Cash is cash, that would be the best way to do it. Then you own the property free and clear and could do a cash out refinance (may need to hold the property for a certain period for time before doing this). This would then get cash back to you and in essence give you the mortgage you are looking for. I think/hope that makes sense.....

I would consult a mortgage specialist. Let them know what you are trying to do and let them give you the details on what is possible. If you need a recommendation for that type of help, please send me a private message. I have a great resource in NJ who is very creative and I am sure could help. Like @Steve Babiak   said, trying to get a mortgage wrapped up in 30 days just doesn't work. Auction buys in my experience are cash deals!!

Good luck to you. Feel free to reach out if you need more help!