All Forum Posts by: Tom C

I just obtained my first REO and we have a signed contract. It took them 4 days to finally accept my offer. They accepted $500 earnest money instead of the $1000 they were requesting. Granted we haven't closed yet, but so far its been smooth. Although the title holder is FREMONT INVESTMENT AND LOAN and they sold off their mort divsion some time ago. So it's not as though I am dealing with a big name bank either.

Ben,

Is this going to be a cash deal or are you using hard money. Those finance charges will eat your profit, unless you are doing a cash deal. Also with being such a tight deal, I am assuming you will be doing your own work? Not much room to play here. You didn't say if you have been in the house yet and if you did and its a REO, the power was not on, right? Are you also adjusting your rehab expense for things like the furnace, water heater and broken or missing water pipes, perhaps a gas leak in the basement or worse in the front yard. These are things that you will encounter as you bring the home back to life by turning on the utilities and should pad your expenses for them.

Since there are so many for sale, as you know you will have to be prepaired for your holding cost or major discount cost. Either of the 2 will also eat a lot of your profit.

Ben,

I wasn't trying to be blunt and if you took it that way then I am sorry, there is nothing here to analyze until get inside the house and know what you are trying to wholesale. When you do, come back and let us know more details.

Please ask as many questions as you like. I sure do.

Ben,

Until go and look at the house you have no idea if it's a deal or not. As far as you know the inside could be gutted. If the bank is asking 70K and you are thinking due to comps that it could ARV = 80 or 90K, I don't see a deal. With a REO, they are going to require money down, 500 to 1K. As far as wholesale, I am not sure how you do that if you don't have a buyers list and you're dealing with a bank.

Until you contact the agent and go look inside you have no idea what it is. If you spot a house that you think is a good deal, you need to pick up the phone and get inside the house quickly.

But is this true

"I did use the 10 day inspection contingency, but my agent did say that if I backed out, they would require an inspection report showing where it failed."

If it is, I might as well just let them keep the required earnest money by time I pay for an inspection.

This house is definitely one of the better ones that I have come across. The former owner paid 75K in 2004 for the place. Way over paid for the area. In 2000 someone paid 48K for it. I would have to believe that who ever paid the 48K must have done all of the updating in order to get the 75K for it in 2004. It has completely new wiring, windows, furnace, hot water heater and central air. All of the wall paper is still in very good condition. I will have to replace a couple of tile in the bathroom. All of the carpeting has been pulled up like most REO's and HUD's, and surprising all of the floors are hardwood and only need wax, including the stairway. I am going to replace the missing copper with PEX's. I have never used it, but it is suppose to be very easy to work with and cheap.

I did use the 10 day inspection contingency, but my agent did say that if I backed out, they would require an inspection report showing where it failed.

Thanks for the tip.. But the bank accepted my offer. Here are the details.

SFR 3bd 1ba 2 car detached, very nice home all hardwood floors and finished trim, central air, new windows, furnace and hot water heater. 1368 sq ft. Needs roof repair and home owner took some of the copper. Will need very little rehab, no painting or carpeting required.

Purchase price 16K
Rehab 2K
ARV 62K

Rents $600.00

If you ground it against the box, it will show that its grounded on the test light. Unless you have one wire up and one down, both wires must be across for each other.

I currently have as offer out on REO and have been waiting 4 days for the bank to respond. There is another REO that just hit the MLS that I would like to make an offer on, but I can only get one. How do I word the contract that will allow me to back out of the second bid when and if this first one is accepted by the bank?

Or do I have to wait until the bank makes up it's mind on first one, before I can go and write more contracts?

If its a rental and if you ever want a Section 8 tenant, it has to be grounded. They test every outlet. Either replace it with a 2 prong or ground it directly to the metal box. Pull the plug out, hook a ground wire to the outlet and screw it to the box. Buy yourself a ground tester for 2 bucks and make sure it lights up correctly.