All Forum Posts by: Sam Leon

I am seeing a few homes on the MLS saying "Home cannot be viewed, currently occupied by squatter and buyer is responsible for eviction of squatter".

Has anyone dealt with squatters? You can't evict until you have title right?

Why wouldn't the bank get the cops to evict so they can sell it "properly"?

I have another interesting data point which is the reverse of my previous situations.

REO home listed at 157K.

First day on the market I submitted a contract via my agent at 145K cash offer 30 day closing 25% EMD AS IS with inspection contingency.

Two days later the listing agent said bank asked for best and final.

I went back to look at the property, stayed there 2 hours basically almost did an inspection, with a complete inventory of work estimated. With that I upped my offer to $150,123 and REMOVED the inspection contingency.

So my offer was $150,123 cash, 25% EMD, AS IS, no inspection, 30 day closing.

I didn't get the deal. Someone else got it.

I later on found it was sold for $148,850. I couldn't understand why this time the price is lower than mine.

My agent told me the buyer's agent works in the same office as the listing agent, and he said this is typically an indication the buyer was already arranged by the listing agent, but in order to look legit they use someone else in the same office to represent the buyer. Says it's done all the time and may be the bank never saw my offer.

Oh well.

What is the purpose of a property listed on the MLS with no description, address withheld and no pictures?

I am aware a realtor can access the MLS listing and get more information, but to the generic public it has no information. Is it just a nice way to tell you this property is being listed because the bank says so but we already have a buyer?

In addition, does anyone has any suggestions as to how to get a backup offer contractually executed?

I have submitted a few backup offers when the listing agents suggested and each and every time they never get signed, they just sat on it. I have the feeling the agent solicited the offers just so they have them, perhaps as leverage to the buyer, but they don't execute it. That's just a waste of my time.

Wayne, can you elaborate on the "buyer shall have sole discretion to raise price or pay additional fees in addition to purchase price" comment?

I am not following that. Are you saying your offer price in this situation would be substantially lower knowing that you may have to come up should the backup contract slide into first position?

Thanks.

That's an interesting way to look at it. Basically you have nothing to lose other than the time it takes to do your due diligence and writing up the offer.

However, I got the feeling, at least down in South Florida, backup offers are not taken seriously. Most don't think of backup offers as a truly contractual thing.

Last time I submitted a backup offer, basically an AS-IS contract, plus a backup addendum, proof of fund and I asked them how they want to handle the 10% EMD. They said to check off the EMD is due when the lender approves. Okay, so basically they don't need any EMD until the first contract cancels and even then it's not needed until lender approves. So basically, it's not a true backup "CONTRACT", it's just another offer they have sitting around which they may decide to act on or not.

Another time I did a backup was a REO. The agent said to put in 10% EMD but "don't send it to an escrow, just write up a check, make a photocopy of it in the package" and send it in. The check stays in my folder for a while.

Both cases I never got back from them the "SIGNED" backup contract. In other words, there was a backup offer, but there wasn't any contract. They like to solicit backup offers and hold on to them and that's it.

The other concern is since the reasons I am contemplating doing backup offers is because some of these properties went into pending on day 1, or when I tried to schedule something they scheduled me 3 days away, and on day 2 they said there is a contract. When I inquire further, they say "you can always write up a backup offer".

But then, how do you do your due diligence on it if you can't even see the property? How do you come up with a price? Most of them will not show the property once the first contract is signed. Do you just put down some "worst case scenerio" numbers?

Do anyone here have any experience on submitting backup offers to short sales?

What is the success rate?

I have a number of properties that I am interested that went into pending on day one, or before I can arrange a visit.

My agent suggest I submit back up offers site unseen just in case some of them fall through.

My thought is most of those will not fall through very likely those are buyers with inside track and a backup offer is a waste of time.

Thoughts?

Michael Siekerka, in a short sale the time between my "inspection" could be 3-6 months from the official inspection. I do my inspection, but I don't go through it with a fine tooth comb. I am able to see major issues, but I don't take temperature of the cool air coming off the vent, I don't flush every toilet or turn on every faucet, nor do I actually run the dishwasher, or dryer etc...my inspection is visual. Once I get a property under contract, then I have a more formal inspection done by a professional company AFTER the bank approves. As I said there is a period of time between my inspection and the formal one, and I do it for the peace of mind in case I missed something. Besides the "inspection" is not just for the property, down here the inspection period gives you time to inspect other things, such as a condo association governing documents which again can cost a few hundred dollars to purchase and days to read through to see if there may be problems.

I am not sure if this is a continuation of my other thread "Keep being undercut in SS or Foreclosures" but I thought this may be a good topic to discuss and debate.

Personally, when I see a property of interest to me, I do my homework, I would visit the property once, to do a quick look over, and get a general idea. Then I go to my research, which often involve going to the city to get plans, or online permit searches, I would also do some digging on the public records, find out about liens, open permits, violations, possible HOA back dues...then I would do a second visit which might take an hour or more, during which time I do my punch list of repair or update costs.

This whole process would take me 1-3 days, and I don't care if they have 20 offers on the table and need the offer by next morning, I do my due diligence and if I am not given enough time to cross my "T"s and dot my "I"s, I move on, nor do I let how many people are bidding on it to affect my numbers. Now once I do my homework I take everything into considerations then submit my offer which is typically my best bottom line number.

Often times I also let them know what I found, and let them know that my price already reflected what I found, and yes even though it's an all cash offer with an inspection clause, I thought by letting them know what I already know - and hence they know that there isn't a game that I am looking to play farther down the road. In my opinion this is fair and straight forward, I thought it would stop the time wasting and game playing.

Well, it seems to be a two edge sword.

First, it seems - I am not sure - it puts me at a disadvantage if all they care about is the highest bid when the highest bid may be $5000 higher than my offer but 3 months later, the buyer uses a new inspection report to renegotiate the price down say $7000, they end up getting less. An agent told me the initial price of the SS is not that important, get a bid in to "tie up the property" and worry about everything later.

Second, the fact that I did my homework and dug up details seem to scare some sellers away. My thinking is it would make them feel more comfortable and secure with my offer, knowing what I knew, but it seems others don't think that way. I had one SS where they had two offers (including mine) and they were very enthusiastic at first. However, I noticed they had an open permit for an illegal shed (which is not a big deal), but also there is a strip of land they have in their yard that doesn't belong to them. I did some digging. The city shows a 12' wide paved road through the northern end of their property. However, they have an electric fence that fenced off that section of the road such that the road dead ends on their property. This is highly unusual and I consulted my attorney and I was able to get an old survey and long story short, I decided it is still worthy of pursuing even if I have to modify the fence and yield the strip of land back to the city. I finally submitted my offer and also let them know there is an encroachment issue and I am aware of it so not to worry. They accepted the other offer, and my agent told me the listing broker said the seller decided to accept another offer because they were worried that I might back out of the deal after the SS approval due to the encroachment issue. OK, so help me out here. I am already aware of this, I told them it's not a problem, that this will not be a factor later on. The other buyer is clueless, but guess what if they do a survey this WILL come up a few months later then what?

I guess my question to the pros here are:

(1) Should I submit a bid that is my best and final? Or should I put in a bid without considering the repair cost, knowing this will put my bid higher, but count on the inspection process to yield a report that I know I will use to knock the price lower?

(2) Should I keep quiet about problems and issues I found and not tell the seller? I was assuming letting them know that I am aware of issues and also let them know these issues are already reflected in my numbers will give them the assurance I will not play games down the road, but seems some sellers would rather deal with buyers who don't do their homework?

Tim Breems thanks, I will try some of the routes you suggested. I thought about looking into auctions before but thought at the time the risks are higher with the buyer having to really do their title work and lien searches carefully ahead of time since you are not going to get a title insurance.