All Forum Posts by: Bob J.

That was a great detailed reply from Ralph S !

My 2 cents: I would start over. If you can withdraw your offer now without any loss, I would do it. Most likely there isn't anyone waiting for the property at the price you offered since it sounds like you may have offered too much.

Before submitting any offer to a bank on an REO you MUST do your own due diligence. You should have a buyer's agent because it sounds like the listing agent is just letting you dig yourself in deep.

Your agent can meet with you and a contractor who can give you a realistic retail cost of the rehab. THEN you decide how much to offer.

I never put down more than $1000 earnest money which is usually held by my agent or if the listing agent agent insists, they can hold it until the contract is ratified by all parties. But it shouldn't matter so much because you've already done your homework and you know you want the property.

You will also need some form of pre-approval or proof of funds. I use a letter from a private lender or hard money lender.

You should always be able to use the financing contingency as an escape clause. I've had several properties go to underwriting and then not be approved for the amount I needed. I told the listing agent, they returned my earnest money, I sent then a release of contract and that was it.

Remember, if you're uncomfortable with the deal, maybe you shouldn't do it. There are a TON of REO's out there, you'll find one that makes sense for you.

Good Luck!!!

Since you are unfamiliar with short sales, you may want to get direct advice from an experienced investor in your area. You could also find a buyer's agent who knows how to do them.

But first, you may want to call the listing agent just find out what's going on. Ask if they have any experience with short sales. Ask if they would be doing the negotiations with the lenders. If they've never done this before, its going to be tough. They need to collect all the correct info from the seller and correctly submit the short sale package before you can begin the process.

If you really want the property though, I think you and your agent/advisor need to control the negotiations. That way you will know things are getting done correctly.

You should offer about 65% FMV. This is just an offer to get the lender to send for a BPO. The bank will give you a counter offer. You should have your agent do a BPO and have a detailed repair list to justify your final offer. It should come out to about 80% (or less) of the BPO, minus repair costs.

Of course there are so many details, but hopefully this gives you an idea what to expect.

You shouldn't be discouraged though. It may seem a little complicated but if you get a great property at a great discount, it'll all be worth it. Especially when you do it again and again!

I would definitely agree that short sales are a more advanced form of RE investing. I think the best thing to do is to learn how to do them from someone in your area who is currently doing them. It may take you several months to really figure out all the complexities, nuances and laws.

But... Considering that there were 3 million foreclosures last year and possibly 7 million this year, its well worth it to take the time to learn how to do them correctly.

A suggestion concerning your question though; a lot of lenders are getting wise to land trusts and option contracts. It seems better just to use a standard purchase and sale agreement. Then you MUST have a short sale addendum if you want to flip the property. The addendum will have the proper wording that will give constructive notice of your intent to re-sell at a profit. This will help the C buyer's underwriter understand your transaction.

You would want to record a notice of contract for the same reason. It will also protect your position.

I would also suggest that you don't want to think of yourself as 'tying up' properties. Real estate is really a business about helping people and if you're dealing with distressed homeowners you should want to be respectful of their situation.

I also agree that the fastest way to get some real cash in your pocket is by doing a few wholesale deals while you're learning shorts sales.

Good Luck!!!

Thanks for the replies!

Its always good to know that we can support each other.

Hello Everyone,

I'm just joining the community. I've been reading the forums for several months now and believe this a truly a great place for investors to help each other out.

I believe we live in a great time where we can so easily ask questions and get support from other like minded people on the internet.

This is a cool forum. The moderators do a great job of keeping foolishness to minimum and there always seems to be someone out there willing to help those with questions.

About Me: I've been studying and working with real estate for several years. I first heard the word 'foreclosure' when I was 9 years old and it was happening to me and my Mom. I didn't really understand it until later when I saw all those get rich quick infomercials in the late 80's. That's when I fist got interested in real estate as a vehicle for financial freedom.

Of course, most of those infomercials are just scams and it took me a long time to figure out the truth. (That's why this is a great forum.) But a great thing happened in 2002 - I lost my job and eventually was homeless for a while.

I say that was a great thing because I really believe in turning terrible situations into awesome opportunities. So while I wasn't working I spent all day in the library reading every book they had about real estate investing. I eventually figured out how to buy a house with no money down and without credit. I bought my first property using hard money. I didn't even have a valid driver's license and I bought a house!

Now I'm specializing in doing short sales and REO's. I'm looking to learn more from others with real world experience and to share what I've learned so far.

But I guess the biggest thing I've learned so far is that this is an amazing country. You can hit rock bottom and still have opportunities to do great things for your family and help others.

Sorry for the long winded post, but I like to remind myself and others that we have so much to be grateful for because there is no limit to the things we can do.

I'd also like to share a poem that keeps me inspired and hopefully it helps others.

I Do Not Choose To Be A Common Man by Dean Alfange
I do not choose to be a common man
It is my right to be uncommon—if I can.
I seek opportunity—not security. I do not wish to be a kept citizen, humbled and dulled by having the state look after me.
I want to take the calculated risk; to dream and to build, to fail and to succeed.
I refuse to barter incentive for a dole. I prefer the challenges of life to the guaranteed existence; the thrill of fulfillment to the stale calm of utopia.
I will not trade freedom for beneficence nor my dignity for a handout. I will never cower before any master nor bend to any threat.
It is my heritage to stand erect, proud and unafraid; to think and act for myself, enjoy the benefit of my creations and to face the world boldly and say, “This I have done.â€

Thanks!!!